Douglas Alexander: I am grateful to the hon. Gentleman for his gracious words in relation to the work of the Department and hope that they inform his other public comments on it in the months ahead. I can assure him that we are in regular contact with UNRWA. We have officials on the ground who are monitoring the situation, and as of yesterday morning, up to 200 humanitarian staff were on the list of people trying to enter Gaza. It is exactly that type of issue that we are discussing with the United Nations, as well pressing the Israeli authorities on it.

Mark Lazarowicz: My right hon. Friend was clear in his views on the scandalous refusal by the BBC to broadcast the appeal from the DEC. Now that the BBC have perhaps had time to reflect on the public anger that the refusal caused, and on the fact that there is still a clear need for that aid to get to Gaza, would my right hon. Friend urge the BBC to rethink its decision and to broadcast any appeal it wishes to promote on this matter?

Jim Cunningham: I thank my hon. Friend for that answer. I emphasise that it has been three weeks since humanitarian aid got through to Wanni. What are we doing about a ceasefire?

David Cameron: I will tell him about the judgments that we have made. Voting against VAT—that was the right judgment. Supporting a national loan guarantee scheme—that was the right judgment. The Prime Minister says that the banks collapsing was nothing to do with him, but let us have a look at the judgments that he made when he was Chancellor. Who gave us the biggest budget deficit in the developed world? He did. Who left us the most personally indebted country in the world? He did. Who set up the regulatory system that has so failed? He did.
	Let us have a look at another of the Prime Minister's judgments. The Prime Minister and the Chancellor have told us repeatedly that the economy will start to grow again at the beginning of July this year. The Schools Secretary, the man who was the Prime Minister's chief economic adviser at the Treasury for so many years, says that we are heading for the worst recession in 100 years. Does the Prime Minister agree with his Schools Secretary?

Grant Shapps: The hon. Gentleman is absolutely right. I have some sympathy with the Government on this issue, and I have tried to work constructively with them. It is notoriously difficult to work out how many people are living rough because it is so difficult to count them. It is even harder to find out how many people are homeless, with definitions including living in hostels and bed-and-breakfast accommodation, and sofa surfing in other people's houses. I completely understand that it is not an easy science, but it is incredibly disingenuous to fail to count correctly the number of people sleeping on the streets.
	I have pointed out the problem to Ministers before, and it could be resolved—at least to a reasonable extent. The latest proposals are artificially to halve the numbers to 214, but anybody walking on the streets knows that more than 214 people in the nation are sleeping on the streets. It is just not good enough, and I hope that the Minister will be able to respond to that severe problem.
	If solving social mobility would ease some of the problems and 70 per cent. of social tenants want to own their own homes, one might think that the Government would have acted somehow. They have—under a myriad of complex, confusing and sometimes completely contradictory schemes, all branded under the "homebuy" label. The Government have a target of helping 120,000 households into home ownership between 2005 and 2010. How have they done? There have been 4,500 sales under their open market homebuy scheme and 18,500 under their new build homebuy programme; so far they have got to about 23,000 of their 120,000 target, which is not too good. Social homebuy, a scheme designed to have helped by now in excess of 10,000 households, has in fact assisted just 235 families.
	A couple of weeks ago, I asked the Minister for Housing about the issue; she told me that social homebuy, which has helped just 235 families, was just a pilot. I know that she is just the latest incumbent to hold the fast-churn housing brief, but I have to tell her that she is wrong. The scheme may have been a pilot once, but it has not been for nearly a year, and by now we would have expected it to be having an impact. According to the Government's own figures, about 5,000 homes should have been purchased in that time. In fact, since the scheme ceased to be a pilot, it has been dropped pretty quickly by housing associations and local authorities.
	There is a better way. We will scrap Labour's failed top-down targets and replace them with real incentives to create the kinds of communities where people really want to live. We will scrap regional planning, regional assemblies, regional spatial strategies and all the quangos directed to tell local people that the Government know what is best for them. We will replace it all with a system that works with, rather than against, local people, helping them to develop their own neighbourhoods.

Margaret Beckett: I beg to move an amendment, to leave out from "House" to the end of the Question and add:
	"notes that the Government is investing over £8 billion between 2008 and 2011 to increase the supply of social and affordable housing, has invested over £29 billion since 1997 to bring social housing up to a decent standard and has made £205 million available for a mortgage rescue scheme to support the most vulnerable home owners facing repossession so they can remain in their home; further notes that there has been a 74 per cent. reduction in rough sleeping since 1998, that the long term use of bed and breakfast accommodation as temporary accommodation for families provided under the homelessness legislation has ended and that since 2003 the number of people who have been accepted as owed a main duty under the homelessness legislation has reduced by 60 per cent.; further notes that the Government has helped more than 110,000 households into low cost home ownership since 2001; believes that the introduction of enhanced housing options services provides tailored housing advice reflecting a household's individual circumstances while choice-based lettings schemes give social housing applicants greater choice over where they want to live; and further believes that the Government has taken measures to make best use of the social housing stock such as tackling overcrowding and under-occupation."
	One thing—perhaps the only thing—that no one in this debate is likely to dispute is that there is substantial unmet housing need in the country today. That need is visible in every sector, whether it be social housing, private sector rental or home ownership. The motion before the House first highlights the levels of house building, particularly for those in need of social housing.
	As he does on every occasion, the hon. Member for Welwyn Hatfield (Grant Shapps) made a feature of the level of new build. His fundamental argument—on house building, social housing, temporary accommodation and rough sleeping—seems to be that the former Conservative Government had a housing record of which today's Conservative party should be proud, and that it contrasts favourably with the record of this Government. I am not sure that that was altogether wise of him; there are one or two flaws in that argument.
	What is unquestionably true—the hon. Member for Colchester (Bob Russell) referred to it earlier—is that in the early 1980s, the then Government instigated a whole-scale sale of council properties. Understandably, that was a very popular policy. The first hole in the argument of the hon. Member for Welwyn Hatfield appears when we recall that the properties sold were not replaced. In fact, repeated obstacles were put in the way of local authorities—many of them Conservative—that wished to replace lost stock so that they could continue to provide homes needed for social rent. From 1983 on, however much they built, there was a net reduction in of local authority housing stock in every year of the life of that Conservative Government.

Andrew Slaughter: Access to housing that is adequate in terms of both size and condition is by far the most serious problem for my constituents and, I suspect, those of many Members representing inner-London and other inner-city areas. The pressures related to schools and health care experienced by inner-London areas as a result of social deprivation and population mobility are exaggerated in comparison with those in other parts of the country, but the housing pressures that they experience are exaggerated to an even greater degree.
	Although I am pleased that we are debating this issue, I am frankly appalled by the trivial and content-free stance that the Opposition have chosen to take. This is student politics. The Conservatives have picked a Labour issue on which they have an atrocious record over many decades to see how far they can get with it. In the time available to me, I shall give a London perspective. I hope to demonstrate not only that this is a complicated issue, but that where the Conservatives are in power—as they predominantly are in London, at both regional and local level—what they are doing, often through deliberate policy, is the opposite of what the motion suggests.
	Housing waiting lists are a guide to housing need, although, interestingly, my local Conservative council says that they are irrelevant because anyone can sign up to them. The statistics on overcrowding or temporary accommodation are probably a better guide. They show that 75 per cent. of families in temporary accommodation are in London, as are 40 per cent. of overcrowded households.
	I am pleased that the Government are now investing, but their priority was dealing with conditions that had to be dealt with. I wish that investment to deal with housing supply and the size of units had begun earlier, because we are now having to play catch-up. As was pointed out by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), we should appreciate that the appalling conditions in which council housing had been left had to be addressed; however, because of the increase in housing need—largely due, in London, to the state of the property market over the past few years, which has not been redressed by the fall in prices—we need immediate investment to deal with the number and size of units.
	The problem is that the delivery arm of that necessary investment—which, in terms of both policy and action, consists of registered social landlords, local authorities and the Mayor of London—is simply not reacting. The Mayor's housing strategy involved two significant factors, one of which was the removal of targets. I have heard the rhetoric, and I see it again in the motion, but I have yet to hear anyone explain convincingly how the absence of targets would increase the number of affordable housing units built in London. In the financial year ending in March 2008, the first year in which the Conservatives were responsible for housing starts in Hammersmith and Fulham, fewer than 5 per cent. were affordable housing starts.

Andrew Slaughter: Is that really the best the hon. Lady can do? She is a near neighbour of mine as she represents Putney. That is also an inner-London constituency. Despite Wandsworth council's attempts over the years to move all the poor out of the borough, she must experience some of the same concerns as I do. I have invited Opposition Members to intervene on any of the examples I have given. I am speaking very slowly so that they can understand what Conservative housing policy means in practice in inner London. I have given about six examples so far; Conservative Members are yawning a bit and looking at their watches, and I am sorry if what I have to say is not more entertaining. I invite them by all means to challenge me and say whether or not they support their authorities' policies, but for the hon. Lady to come up with a point of such triviality just confirms what I have been saying.
	The second area I would like to look at is low-cost home ownership, because Hammersmith and Fulham council has put a huge amount of money into promoting that. I shall at this point respond to the hon. Lady's remark. She probably understands that even in Wandsworth housing allocation policies are done on a borough basis. Therefore, what happens in Fulham affects my constituents in Shepherd's Bush. The 200 homes that were given back, in a cosy deal, to a private developer would have been homes for people living in Shepherd's Bush as much as for people living in west Kensington and Fulham. Therefore, the hon. Lady's point is not only trivia; it is inane as well and I am sorry that it is the best she can do.
	No one is against low-cost home ownership; indeed, the previous Labour council in Hammersmith and Fulham brought in a much higher proportion and amount of low-cost home ownership than the current Conservative council. The real shift has been away from social rented housing to market housing. However, there is a problem with low-cost home ownership in London: it is not low cost. That is a problem for many authorities. On the council's own figures, the average income of people accessing low-cost home ownership in Hammersmith and Fulham is currently £38,422. The Conservatives would like it to be higher than that—that is why the Mayor has extended the upper income limit to £72,000—but an income of £38,000 excludes almost everybody in housing need; on those terms, the numbers we are talking about are almost in single figures. The vast majority of people on the low-cost home ownership register are not council tenants or those in temporary accommodation, and they are certainly not people who are disabled or people from black and minority ethnic backgrounds, because the council itself concedes that its policies discriminate against those classes of people as they tend to be on lower incomes. Already, people accessing this kind of housing are earning £40,000-plus, but 40 per cent. of households in the borough are on incomes below £20,000, and they are, in general terms, those most in housing need. This average figure is distorted by the fact that a lot of very wealthy people live in west London, but even the average income is only £28,000.
	The ratio in 2007—I appreciate this might have changed, but not to a very great extent—between average income and the average price of a home was 19; people needed to raise 19 times their average salary in order to buy a property in Hammersmith and Fulham. The general costs of shared ownership properties are about two thirds of market rates when one takes into account discount, rental element, service charges and so forth; that is the formula that housing associations and RSLs tend to work on. Even if the ratios are no longer as much as 19 and two thirds, it does not take much imagination to understand the sort of income level that people need to have to access low-cost home ownership property. This is a problem.
	Hammersmith and Fulham is the local authority that has made it an absolute testament only to invest in property for sale; it is not interested in property for rent whatever. So far this year, five properties have been sold under the right to buy, and about 40 people have accessed housing through the total raft of home ownership schemes. That includes through social homebuy. It speaks very highly of that—although I know those on the Opposition Front-Bench do not—yet it has failed to sell a single unit through that scheme. So, the approach simply does not work.
	Low-cost home ownership is used by Conservative councils as a Trojan horse for doing nothing. They are happy for people on £50,000 or £60,000 to have a property that they would not otherwise be able to access unless they were on £70,000 or £80,000, but these so-called home ownership schemes are simply not a possibility for people on £20,000 or £30,000—the key workers, and the people on low, average or even twice-average incomes. The Government need to take note of that, because we often all fall into the trap of saying that we are providing for people who just do not qualify for social rented housing when, in reality, we are not providing for that class of society at all—things are being done with extraordinary cynicism.
	The final point that I wish to deal with is slightly topsy-turvy, because although these policies are being pursued with some gusto by Conservative councils across London, their net effect is to keep waiting lists down. That is partly because of the temporary accommodation targets, which are a good thing, but they have unintended consequences. Conservative authorities, in particular, are looking at ways of keeping people off the housing register come what may, and that can be done through the crudest and cruellest measures.
	For the 25 years that I have been going to Hammersmith town hall, if a homeless family turned up out of hours—after 4 o'clock and thus having not been able to get into the housing office—they would have to wait in the reception at the town hall until the emergency service could find them emergency accommodation. In such circumstances, people now have to wait outside the town hall, where a red phone has been put up. They speak to someone on the other end of the line and they then wait for one hour, two hours, three hours in the rain or the cold because they are not considered fit people to wait in the town hall foyer of an evening. Staffing, too, has been considerably cut back.
	These are all old tricks learned from Wandsworth and Westminster in the 1980s. There is a story that may be apocryphal, although I do not think it is, that back in the early '80s Wandsworth council closed its housing advice services and put a map on the front door showing the way to Hammersmith and Fulham town hall, because that is how much it was interested in people in housing need in the area. The messages are unmistakable. If a Member of Parliament writes in to complain about somebody who is wrongly banded in an allocation scheme or who has been waiting an inordinate amount of time, they receive the most cursory letter back emphasising—it does not apologise or give an explanation—the length of time people would have to wait to access social housing. These letters say, "For this type of property, the wait will be a minimum of 12 years." Everything is geared to encouraging people not to register, to move out and to go somewhere else—that is the policy. It is not surprising that that is the policy, given what I said about the absolute decline that has taken place—the demolition and sale of housing, and the failure to build it. In such circumstances, of course these councils cannot cope with more people on their waiting lists.
	Someone who does manage to see a housing adviser at Hammersmith and Fulham will be pressurised into signing a form that says that they do not wish to go on to the housing register. What they will be given instead is a little assistance with accessing housing benefit and possibly with a deposit. They will then be introduced to a friendly private landlord who will offer them a property—this is called "direct lets". Typically, it will be an ex-local authority property—under some of the schemes that we have heard about—in another borough, it will be vermin-infested and it may not have gas or electricity. But the council does not mind that, because the person will be not only off the list, but out of the borough. The relationship that local authorities have with some very dubious landlords of this kind simply in order to be able to prevent people from accessing social housing or even getting in the queue for it is, again, something that the Government need to examine. The irony is that this system means that the housing waiting lists are lower than they perhaps otherwise would be. I do not deny, and have never denied, that this is an issue with which the Government must come to terms; it will not be resolved by local authorities in London.
	I shall give one more example, because it was used earlier in relation to temporary accommodation. There is some good council-owned temporary accommodation in residential streets throughout the borough of Hammersmith and Fulham—not only in Shepherd's Bush and Hammersmith, but even in Fulham. That is being sold off for auction; in other words, the families who are in those properties are being moved out. Either these families jump the queue, which is good for them, but bad for others on the list, or they go into private sector temporary accommodation, which is, again, usually outside the borough, and the taxpayer will be paying up to £700 a week in housing benefit charges. Again, the council does not mind that, because it gets a capital receipt for selling off the property in the borough. The council also does not mind that the total cost to the taxpayer might have been £100 or £200 a week when the family was in the original accommodation and will be £700 a week in the new accommodation—after all, it is not the council's money; it is the Government's money.
	This approach is being taken on every possible criteria and in every possible area of policy. What is the reason for that? Part of the reason is social engineering and, indeed, political engineering. The Tories who are running London make Shirley Porter look like Joseph Rowntree in terms of that degree of policy. A deeper motivation is involved, which came up in the Tory policy review. I have put this to the Opposition spokesman on many occasions and he wriggles a bit. The press release put out by my local Conservative council celebrating the overturning of targets states:
	"Council housing can be a great safety net to help get people back on their feet, but that should be all it is. Council housing is a springboard — not a destination".
	That is what lies behind the Conservatives' housing policy, and these authorities are simply a stalking horse for what I believe we will see if they get into government; permanent council housing—rented housing—is no longer considered to be an option, which is why we will see right to buy in respect of registered social landlords and why we will see no new building, despite what is said here. We have heard nothing from them to say where the money will come from for that building. We will see a continued pressure on the most pressurised part of our society—people who live in housing need—with all the socially detrimental effects that we all know that has in terms of schooling and health. This is a deliberate policy—it is not incompetence and it is not down to a lack of money or resources—of studied cruelty, which the Conservative party has decided to put into effect. It has certainly done so in London, and I suspect that it has done so in other parts of the country too.
	That is why I say that despite this welcome opportunity to debate these issues, rather than making the trivialising and schoolboy points that we have heard, the Conservatives should look at what they are doing to a significant sector of our society—people who are being marginalised and punished for nothing more than not having the means to afford good quality housing in our capital city.

George Young: It is a pleasure to follow my successor but one, the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter). I was not surprised to hear that housing remains the most challenging problem for his constituents—it certainly was for the 23 years that I represented Ealing Acton—but I must say to him that he overstated his case. Accusing my hon. and right hon. Friends of having a housing policy of "studied cruelty" is absurd, and saying that it is our intention to punish poor people is a parody of my party's housing policy. I honestly do not think that that sort of language advances very far what should be a serious debate about housing.
	I wish to pick up a point made by the hon. Member for Sheffield, Attercliffe (Mr. Betts). I am sure that some communities are resistant to more social housing being built, but other communities do not have the rather narrow vision to which he referred. There is a village in my constituency in Hampshire that is accommodating all the extra houses required by the local plan and still has taken the view that there is not adequate social housing in the village. There is a move to sell off the allotments owned by the village and relocate them at the edge in order to provide more social housing in the middle of the village, over and above that which it has to provide. The reason for that movement is that the village is in control—this is not additional housing being foisted on it by a remote authority; it is local people seeing a local need for houses for the teachers, the postmen and the nurses, and wanting to make that provision. So, there is another side to that coin of resistance to new housing.
	I do not want to fight old battles, although there is a real temptation to do so, given that some of the speeches we have heard have gone back to the 1970s, the 1980s and the 1990s. However, I will say that the introduction of the right to buy was a progressive and enlightened social reform that was bitterly resisted by Opposition parties at the time. It enfranchised millions of people and made a reality of home ownership for people for whom it had previously been a dream. It transformed monolithic local authority estates and generated large sums of money that either reduced public debt or were recycled back into new housing. I make no apology for being a keen supporter of the right to buy when it was introduced.
	Other policies were bitterly opposed at the time—housing action trusts and large-scale voluntary transfer—but are now an accepted part of housing policy. They are the foundations on which housing policy is now built.

Nick Raynsford: I was going to say that all Governments have tended to adopt that approach. It is very easy and simplistic. A politician under pressure is likely to say that he will deliver numbers. Nye Bevan did it immediately after the war when he increased the housing output dramatically. Harold Macmillan did it in the 1950s: he promised 300,000 homes a year and delivered them. Harold Wilson said, "I'll go one better, I'll do 400,000 homes a year," and he did it.
	In their own terms, those politicians were successful, but the legacy was not so successful. When the right hon. Member for North-West Hampshire was Housing Minister—and this was still the case when I was in the post—he had to deal with the problems associated with an excessive focus on quantity not quality. Those problems were partly seen in the very unsatisfactory council estates that were often badly designed and shoddily built, and which above all were inadequately maintained. Many of them had to be either demolished or substantially remodelled at enormous cost.
	However, an equal problem involved the many very unsustainable private housing developments that were often built on greenfield sites to unsustainably low densities. Their very poor energy efficiency has left us with a huge legacy of homes that are very difficult to keep warm economically and which contribute massively to global warming through carbon emissions. So let us not go down the route of focusing uniquely on numbers and forgetting the wider issues that are vital to a good and sensible housing policy.

Robert Syms: I declare my interest, as set out in the Register of Members' Interests; I am the director of a building company and a property company, and have one or two other entries.
	This is an interesting and important debate. Unemployment did not quite break the 2-million mark today, but many Members see people with housing problems in their surgeries. It is fairly clear that many of the people who come to see me time and again with great, long-term problems have difficulties that date from their being caught with negative equity in the early 1990s, when my party was in government. They have never quite recovered from the housing difficulties that they faced then.
	The difficulty today, as opposed to 10 or 15 years ago, is the level of personal debt; mortgage debt is far higher. I fear that as unemployment rises, the consequences for individuals will be pretty severe. One welcomes any kind of assistance with mortgages, but the reality is that if somebody is out of work for any time, they will get into financial difficulty. If there are two people in a household who work, and one loses their job, the household does not necessarily qualify for mortgage help. The rules mean that those who are highly geared up, in particular, will face problems. As we heard from my hon. Friend the Member for Welwyn Hatfield (Grant Shapps), our Front-Bench spokesman, the figures show an increase in the number of people on the waiting list for social housing. I think that in the next two or three years, there will be a large growth in those figures.
	There was not much that I could disagree with in the speech of the right hon. Member for Greenwich and Woolwich (Mr. Raynsford); it was a well-turned speech on housing policy. Numbers are not the only issue, although they are important. The difference between this country and the United States of America, which has surplus housing, is that longevity and divorce mean that there will be continued housing demand here in the long term. However, we must ensure quality housing, and we must manage our housing stock better. Financial or tax incentives to manage our housing stock better are necessarily far more productive than sallying forth with targets for 3 million homes.
	We should bear it in mind that there are some 2 million empty flats over shops, and local authorities and social landlords still have quite a lot of void properties. There are far too many empty properties in the private sector, and a lot more could be done to use existing housing stock to house people. We have to consider the issue as a whole if we are to provide housing, that most basic requirement. My right hon. Friend the Member for North-West Hampshire (Sir George Young) mentioned the difference between the car industry and the housing industry. He was right; it is important that we house people, because the consequences of poor housing for families and children are substantial. I am on the Health Committee, which is looking into health inequalities, and the issue of housing tends to come up fairly regularly in relation to health inequalities. The issues are intricately linked.
	In the brief time available to me, I would like to raise an issue that I mentioned in an intervention. We are fortunate in my area to have Poole Housing Partnership, an arm's length management organisation. It does a very good job in providing housing for people. It is still within the housing revenue account system. This year, it is paying £3.4 million of negative subsidy—in other words, it pays that amount into the pot. Next year, it is expected to pay £4.5 million into the pot, which is about 20 per cent. of council rents. Our area has high housing costs, and we have a waiting list as a result. Social housing has to take the strain. Local people find it difficult to understand why, when they pay rent to Poole Housing Partnership, that money is recycled elsewhere and goes towards national public policies. It was pointed out in an intervention that if it is right to subsidise council rents, the subsidy should come from general taxation; it should not be other tenants who subsidise council rents. That is a powerful point.
	We are heading towards the decent homes standard, which is good; I think that we are all in favour of that. However, many authorities and arm's length management organisations will find it difficult to continue to maintain their houses at a decent standard if the sums that I have mentioned are to come out of their budgets. Poole Housing Partnership is worried that the current system may not be sustainable in the long term because of the sums that are taken out of the rents. Those sums could be spent on maintaining properties, reducing the number of void properties, and providing a real service.
	I make a plea to the Minister. I know that the issue is under review, and that there are no magic bullets. I know that things are difficult, because if we ended the system, there would be complications and difficulties elsewhere, but my constituents, particularly those in council housing, find it difficult to understand why they are subsidising other parts of the country. They have a good arm's length management organisation in Poole Housing Partnership; they will not forgive it if, in the long term, it has to become part of a bigger organisation because of the method of financing.
	As we all know, housing is a basic service. It is important to our constituents. The point that my right hon. Friend the Member for North-West Hampshire made about the VAT reduction was valid. Given the situation in the building industry, the number of surplus building workers, and the fact that there is potential housing land on the market, the money could have been much better spent on a long-term objective that would meet the demand that many of our constituents want met.

Bob Russell: I understand that the hon. Member for Welwyn Hatfield (Grant Shapps) is visiting my constituency tomorrow. He will be welcome in the beautiful town of Colchester. I am delighted that he is coming to Essex. On an Opposition day, not one of the 13 Conservative Members representing Essex constituencies has bothered to turn up for a very important housing debate.
	I rely on the hon. Member for Welwyn Hatfield to put that right. He will find an inspirational Liberal Democrat-led local authority whose housing policies in a very difficult time have won awards for their ways of trying to deal with the housing crisis and homelessness. I understand that the hon. Gentleman is going to the night shelter where those who are in desperate straits are accommodated, and he will find a town where we have the mayor's project, the YMCA foyer, a women's refuge and so on. What we do not have, unfortunately, is a house building programme such as we had 25 or 30 years ago.
	It is important that we look back in order to learn the lessons so that we can go forward. It is to the credit of successive Labour and Conservative Governments in the middle 50 years of the 20th century, bypassing the war, that there was mass house building of family houses which meant that by 1980 there was no such thing as homeless people in my town. Families could be guaranteed a family home within six months of going on the waiting list. It is not good enough for the Government to try to blame the previous Government for the shortage of housing. If one looks back, one finds that the record shows that Conservative Governments built more council houses in towns, cities and villages than Labour Governments over that period.
	There was a time when there was municipal pride—both Labour and Conservative—in providing housing for those in need. It might come as a bit of a surprise to the Minister to hear that one of the reasons I was driven out of the Labour party in 1981 was that I did not object to the principle of the sale of council houses, although I objected to the way it was rolled out with huge discounts. I find it quite astonishing that I was driven out of the Labour party because of my stance in support of those who wished to buy their home, only to find new Labour further to the right than the Conservative party of 30 years ago. I do not have any desire to return to Labour—certainly not as it is today.
	Short of failing to defend the realm, the biggest sin of any Government is to fail to house their people. In my constituency, the number of names on the housing register is nudging 4,000, and more people are involved than those who are named. I am sure that in my constituency and in others there are empty dwellings. I want to see the Government and Opposition parties of the day trying to reach consensus on how we could look at the housing stock in its broadest sense and maximise its use. The Under-Secretary of State for Communities and Local Government, the hon. Member for Hartlepool (Mr. Wright), will have heard my intervention on the Minister for Housing. In my constituency the Government are responsible for more than 200 dwellings, and are paying rent on them, yet they are standing empty. That cannot be right. I am sure that there are other examples of empty dwellings around the country, some publicly owned but predominantly, I suspect, privately owned.
	If the Government can fund an arguably illegal war in Iraq and can bail out the bankers, why can they not fund the housing sector, as suggested by the right hon. Member for North-West Hampshire (Sir George Young), so that housing can come through the system? Not only would that provide work for unemployed building workers and the supply industry—including those involved in fitting the property out with carpeting, furniture and so on—but, above all, it would provide decent family accommodation for hard-working families and their children. The Government have failed the children miserably when it comes to providing housing. If the children are not housed, a whole generation of dispossessed people is created.
	The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) mentioned the new quango. My constituency—I cannot believe it is the only one—has about 100 acres of land zoned for housing, but nothing is happening. Why can the left hand of government and the right hand of government not come together, release that land and get unemployed building workers to build the houses to house those who are homeless? It strikes me that that is what government should be doing: government should be about considering the broader picture and it should be joined up. Housing should be provided for the Government's people.
	The Government have failed, but that is no surprise. I challenged the former Prime Minister at Prime Minister's Question Time, the former Deputy Prime Minister when he was responsible for housing, and the Prime Minister on this point. I have been banging on about it for about 12 years. We can blame the last Conservative Government for their failures, but the Thatcher Government built considerably more council houses than this pathetic Government have done in 12 years.
	Those are the facts and the numbers, but we can have the emotion, too. We are all housed. If we are running our advice bureaux and surgeries properly, we all know from the people who come through our front door, seeking our help, that there is a shortage of housing. If a post-war Labour Government—a real Labour Government—could build housing for homeless people in need in the aftermath of war, why, after 12 years of new Labour, do we have a housing crisis that is the worst we have had in 100 years?

Iain Wright: I start by welcoming the hon. Member for Putney (Justine Greening) to her Front-Bench team and the Communities and Local Government brief. It is the first time that we have debated, and I wish her well. I disagreed with about 98 per cent. of what she said— [ Interruption. ] I will say what the 2 per cent. remaining is shortly. I agree with her that this has been an important debate, as befits the significance of housing. I also agree with her that it is difficult to think of a single other topic that incorporates feelings of safety, security and well-being, community cohesion, health chances, life expectancy, economic prosperity and environmental concerns, but housing does precisely that. That is why the debate has been important and invaluable.
	We have heard about the Belgrano, Iraq and Disraeli, and when I woke up this morning, I did not think that we would be debating those subjects. I did think that we would be debating shallow, superficial arguments from the Opposition, which is what we have heard today. My right hon. Friend the Minister for Housing analysed the argument of the hon. Member for Welwyn Hatfield (Grant Shapps) and systematically and methodically demolished it. She effectively exposed the holes in his argument, as well as the holes that were in the roofs of council houses when we took power.
	The hon. Gentleman was quite astonishing. He was so vague about what a future Conservative Administration would do, and on what "incentives" meant, as to be virtually incoherent. My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) had him on the ropes after a challenging intervention, and the hon. Gentleman simply could not respond. I ask him again: what does he mean by incentives? Will they be financial incentives? Will he match the unprecedented £8.4 billion that was provided by the Government for the supply and provision of affordable housing over the comprehensive spending review period of 2008 to 2011? What does he think of the £510 million that we have provided for the housing, planning and delivery grant? In a previous debate, he saw that as a bribe; I see it as an incentive. I do not understand where he is coming from on that.
	The hon. Gentleman says that local authorities should be doing more, but he provided no alternative answers. More than that, however, what really struck me about his comments and those of the hon. Member for Putney was the sheer gall—the breathtaking audacity of their comments. When in power, their party presided over a housing policy that was characterised by neglect, disrepair and underinvestment. The legacy left by the Conservative Administration was downright disgraceful. My hon. Friend the Member for Sheffield, Attercliffe brought to the debate his considerable expertise and knowledge as chair of Sheffield council's housing committee in the 1980s. He rightly mentioned the negative nature of our inheritance in 1997, and the sheer scale of what we had to do.
	The hon. Member for Putney said that we all start from somewhere—a very profound statement—but where we started from in 1997 was appalling disrepair and underinvestment. Quite rightly, the Labour Government had to address and put right the enormous repairs and maintenance backlog that we saw after 18 years of Tory Government.

Iain Wright: It was absolutely disgraceful, and I hope that the hon. Member for Colchester (Bob Russell) will agree with me.

Iain Wright: I expected better of a distinguished Member. The fact remains that, as my right hon. Friend the Minister for Housing said, we inherited a backlog of repairs and maintenance estimated at £19 billion. Half a million more dwellings were classed as unfit between 1991 and 1996—a symptom of neglect, decay and a lack of care. Britain became the object of shame throughout the world as the number of people living on the streets and in doorways in the capital and elsewhere rose by thousands. As the hon. Member for Putney said, we all have to start somewhere, and that was where we started. That was our inheritance, and we had to deal with it.
	The Government have invested more than £29 billion since 1997, having taken a definite and correct decision to rebuild the fabric of our appallingly maintained housing stock, with a target of bringing all social housing up to a decent standard. More than £40 billion will have been invested by the end of 2010. I pay tribute to my right hon. Friend the Member for Greenwich and Woolwich and others who have participated in that process.
	My hon. Friend the Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter) made what I thought was a measured speech. He is a real champion of affordable housing, and he made an important point about the rigour of housing waiting lists, saying that we should not be fixated on them. There is undoubtedly a housing problem that we need to do something about, and this Government are investing substantial and unprecedented resources to do that. However, I could go on to a housing waiting list in Hammersmith and Fulham and one in Hartlepool, so there can be an element of duplication. My hon. Friend rightly said that we needed to focus on temporary accommodation and homelessness acceptances to tackle urgent need. We have achieved genuine success with that.
	The number of households in temporary accommodation stabilised in September 2004 and has been reducing since the fourth quarter of 2005. Current statistics show a reduction of 13 per cent. in September 2008 compared with the same date the previous year, and figures have fallen below 75,000 for the first time.
	Homelessness acceptances have reduced steadily since late 2003, following the effective homelessness prevention work that housing authorities and their delivery partners have undertaken. That is a key point. The hon. Member for Welwyn Hatfield was kind enough to mention the rough sleeping strategy that I launched in November. It has three Ps. First, we need partnership working— working together to ensure that we do something to end the scandal of rough sleeping. Secondly, we need prevention—we must put resources up front so that we do not have to deal reactively with rough sleeping. Thirdly, we need personalised services—we must tailor services to the needs of the individual rather than having a blanket, one-size-fits-all system.
	I know that the hon. Member for Welwyn Hatfield is worried about rough sleeper counts, which he has mentioned on several occasions. I hope that he will join me in celebrating the enormous success of the rough sleeping strategy in the past 10 years. We have never professed that rough sleeper counts provided a bed for everyone who sleeps rough on a specific night. However, they provide a snapshot, and I am keen to make it clear in the new rough sleeping strategy that annual figures are not estimates of all those who sleep rough in the country. I want to focus resources on the street need audit because I want the rough sleeper count to be perceived as the beginning, not the end of the process, and not only to offer an opportunity to identify need, but, more important, to act as a call to arms.
	The hon. Member for Brent, East (Sarah Teather) made a witty and perceptive speech. She mentioned the slashing of the Housing Corporation's budget and the catalogue of disrepair under the previous Administration. She is right about both points. I agree with much of what she said, but I temper that by saying that I would like more consistency from her party. Her warm words in the Chamber were welcome, and we should celebrate them. However, as my hon. Friend the Member for Sheffield, Attercliffe said, when Liberal Democrats run things, it is a different story. Durham city is ably represented here by my hon. Friend the Member for City of Durham (Dr. Blackman-Woods), but the Liberal Democrats there were shambolic. Good, honest people were let down by Liberal Democrat councils in the City of Durham and elsewhere. I should therefore like more consistency from the Liberal Democrats.
	The hon. Member for Colchester (Bob Russell) made an entertaining contribution, in which he mentioned the role of councils—a theme that has run throughout this afternoon's debate. Local authorities have always had a key role in assessing the housing needs of their area. We want to increase that so that, as well as playing an important strategic role, they have a direct delivery role. The Prime Minister has been firm about the matter. We want to remove some of the disincentives that have been established in the past 30 years so that we can provide a direct delivery role. I therefore hope that hon. Members from all parties will work with us to achieve that. The consultation paper about allowing councils to build was issued on 21 January and I urge hon. Members to look at it.
	The key theme of the debate is the alternatives that the Opposition propose. I have waited throughout our discussion for a credible alternative from Conservative Members. The hon. Member for Brent, East and my hon. Friends suggested alternatives. I wanted to hear from the Conservative party a substantial policy that moved away from party political point scoring and towards addressing the concerns of the people of this country. How will Conservative Members deal with the housing waiting lists? How will they tackle the long-standing imbalance between supply and demand for housing? How will they stimulate the construction industry and help the economy by building the homes we desperately need? How will they address the worldwide lack of credit and subsequent drying up of mortgages? How will they improve the quality and design of the housing stock? How will they make the housing stock greener by ensuring that existing homes are made energy efficient and that new homes minimise damage to the environment?
	We had it confirmed in today's debate that the Tories' housing policy is this and this alone: they will provide incentives. What an astounding abdication of responsible opposition. What planet are they on? Who do they purport to represent? It is certainly not the decent and hard-working young families of this country who are concerned about housing and who want high-quality, affordable and well-designed homes and communities in which to bring up their children.
	The Opposition seem removed from the concerns of real life. The Conservatives have no credible alternative and they will do nothing. In contrast, we are providing unprecedented sums of investment and we are working night and day to address the concerns of families in these difficult times. We will continue to provide real help now—

Kenneth Clarke: I will in just a second. First, let me explain the slight puzzlement that I am currently experiencing.
	If one tables a motion that appears to be supportive of what a Government spokesman said on a subject only two months ago, one rather expects the Government to join Opposition Members in any Division that is called; we might expect to see whether there are Members who have failed to be persuaded by Lord Mandelson and who wish to hold out against this wide consensus, and perhaps expect an informative debate, particularly for those interested in the serious subject of the Royal Mail, to then take place—but no. On the Order Paper has appeared a long, convoluted and almost impenetrable amendment, which someone has decided to table to correct our simple support for Lord Mandelson, and it actually arouses more mysteries than it solves.
	So there will be other questions. Will the Government explain whether they are sticking to their policy? What do they mean in seeking to qualify an endorsement of what the Cabinet Minister with responsibility for the Royal Mail was committing the Government to two months ago, as was the Minister for Employment Relations and Postal Affairs, who repeated the same statement and agreed to the policy?

Kenneth Clarke: I will give way shortly, but I do not want to be drawn on to Titian now. Let me make a little more progress first, as we must get on to the serious substance of the debate.
	When Lord Mandelson made his statement on the Hooper report on 16 December, which was repeated by the Minister now present, he could not have been clearer about what the policy would be. He accepted the three main recommendations of the extremely good Hooper report. There were questions on pensions, regulation and, most importantly, part-privatisation. He and the Minister were clear—there was clarity in both Houses—that they were committed to bringing in a partner through a minority stake in the Royal Mail. They made it clear that that would not apply to the post office network, so Post Office Ltd would have to be separated out, as it was Royal Mail that was having private sector capital and a private sector partner introduced. We have reflected on that and waited for the details, but as our motion shows, we are prepared to agree that that needs to be proceeded with with some urgency.
	I realise that there were some difficulties at the time; not everybody agreed with what the Ministers said then. Indeed, the Minister for Employment Relations and Postal Affairs suffered a considerable misfortune, because on the following day, 17 December, his trusted parliamentary aide—his own Parliamentary Private Secretary, the hon. Member for Dundee, West (Mr. McGovern)—resigned. He left the Government, saying—I am relying on the BBC online site—
	"I do not support what looks to me like partial privatisation of the Royal Mail."
	I do not blame the hon. Gentleman for saying that it looked like partial privatisation of the Royal Mail, because what had been announced was partial privatisation of the Royal Mail. I thought that that was what we were going to debate, but I shall now have to wait and see what we are going to debate.

Kenneth Clarke: I share all the concern about the Post Office—I use it and realise that it is in an important institution—but to say that the Conservatives are the con artists in all this, which is out of order, is ridiculous. Our position could not be one of greater clarity. What is mystifying—what justifies the description that the hon. Gentleman uses—is the complete obscurity of the Government's position, given what they have gone through.
	It is important that we know where we stand, given where we have come from. I was the Minister with responsibility for the Post Office about 20 years ago—I have done the job that the Minister for Employment Relations and Postal Affairs, who is sitting opposite me, is doing—and I faced all the same problems of how to ensure that the Royal Mail became a modern service organisation that could have a very strong future and could modernise in line with what was being done in other countries and so on.
	At that time, I went to the then Prime Minister, Margaret Thatcher, to try to persuade her that we needed to introduce some private capital and private expertise as part of the programme that we were carrying forward in many of the public services. For reasons of which I am still unaware, I and many others were not able to persuade Margaret Thatcher to proceed with the partial or full privatisation of the Royal Mail. I do not want to go too much into the history, but it was widely publicised that Michael Heseltine and I made efforts to persuade the Major Government to introduce private capital into the Royal Mail—I am afraid to say that I argued to my colleagues that it would not last 10 years if we did not go down that path—but, again, I was unsuccessful.
	The Conservatives' approach has been consistent and clear. In 1998, when Lord Mandelson was last Secretary of State for Trade and Industry, he put forward some proposals and my right hon. Friend the Member for Wokingham (Mr. Redwood), who was then speaking on behalf of my party, suggested that private capital should be introduced into the business. We offered to support the Government if they wanted to do that, but they were vehement in their rejections. Lord Mandelson was dismissive of our proposal, saying that it
	"should be stamped 'return to sender'".—[ Official Report, 7 December 1998; Vol. 322, c. 26.]
	As recently as 2006, the current Secretary of State for Health, who was then Business Secretary, said that he would give an "absolute, unequivocal commitment" that a stake in the Royal Mail would not be sold to the private sector.
	The Conservatives have been clear in their approach, I have certainly been clear and consistent and the Labour party has been pretty clear about things so far. I congratulate Lord Mandelson on his courage and his success. Who would have thought that after all those years the labour movement would be introducing this proposal, with Lord Mandelson, echoed by his Minister for Employment Relations and Postal Affairs, commending it in this House. I welcome and support that.

Kenneth Clarke: There should certainly be a level playing field, and the consumer benefits from such competition. It will be extended across Europe and I hope that Royal Mail will be a powerful contender in wider markets, if it can be modernised and reach the standards of efficiency of its competitors. The Government introduced that competition. We agree that it is of lasting benefit to business and the ordinary user of the service in this country, but competition is not responsible for the present difficulties.
	Royal Mail's long-standing difficulties are being compounded by the change in the medium of communication. Far more revenue has been lost—the threat to the taxpayer from Royal Mail's current state is considerable—from the introduction of new technology and the steady loss of traffic than has been lost to competition. Hooper is right that the loss of volume—the amount of letters and parcels to be delivered—is speeding up. It could be 7 to 10 per cent. next year without any difficulty, and that is leading Royal Mail in an ever-more downward direction. Other problems include the fact that it has not adopted the modern technology of its competitors in Europe, the enormous pension deficit hanging around its neck like a millstone and the lack of change over the past few years. As Hooper rightly said, it also suffers from extremely bad industrial relations. As we all remember, there was a most unfortunate strike in 2007, which weakened the business still further. Many small and medium-sized businesses joined their bigger competitors in deciding that they could not longer trust Royal Mail, and they turned away from it.
	I have merely summarised the analysis set out in Hooper. I have not left myself time to repeat it, but it has been accepted completely by the Government and I think that it is unanswerable. The status quo is not tenable in any way at all.
	These problems are familiar to anyone who has ever followed Royal Mail. Similar discussions have gone on for a very long time, and I am sad to say that Hooper's analysis and the litany of problems that he sets out remind me of when I was the Minister in charge. That was a very long time ago, but the problems have actually got worse and worse in the past 10 or 12 years.
	Lord Mandelson's clarion call to action before Christmas came after 12 years of inaction or pointless action, and when one looks at the state of the business one realises that it is getting nowhere fast. In 2001, the Government gave Post Office Ltd commercial freedom, but none of the reforms that have been tried has worked. Over and over again, the Hooper commission refers to the political background that has inhibited the management's ability to take decisions. It is obvious that a succession of Ministers—until these men of courage came along—have been intervening, slowing down the management and giving in to pressure in trying to make sure that the changes do not take place.
	I believe that the time has come for a genuine consensus about action. Does the Government amendment mean that, after two months of failing to produce any detail, they are now buckling at the knee and deciding to leave the matter for a bit? If they are going back to the 12 years of pretty useless inactivity that has been their policy so far, the message of the Hooper report is that the Royal Mail may not survive, as it says that the universal service obligation depends on the changes that it recommends.
	I hope that the Minister will correct my misunderstanding and that he will make it clear that partial privatisation—not even full privatisation—is an option. That is quite a concession from someone who was in the Thatcher Government, but the Opposition are not pressing for anything other than a minority partner to enter into a mixed public- private sector partnership. I hope that the Minister will confirm that that is the Government's policy, and that progress is being made with it.
	I leave the Minister to make the case for private capital. Where else is the capital going to come from, given the state of the public finances, the needs of the Post Office and the circumstances of the next few years? Does anyone really believe that the Post Office will be able to compete successfully with health, education and defence for the capital that it requires? As Hooper argues compellingly, private sector competitors that are prepared to come in as partners in Royal Mail will be able to bring with them the experience of change and of management that will help the transition to go smoothly. They will be able to deal with the understandable fears of staff and stakeholders, and the understandable need to win back confidence in the business.

Kenneth Clarke: No, I am afraid that I do not have time to give way any more.
	The report says that the Government should address the pensions deficit—and so they should. We are talking about £22 billion of assets and £29 billion of liabilities. The company as a company, and the business as a business, is balance-sheet insolvent, as Hooper rightly says. It will probably be quite impossible to get a private sector partner to take an equity stake, when the company has that around its neck. There are options, and the Minister for Employment Relations and Postal Affairs should by now be able to tell us what options will be pursued to deal with the problem.
	The real fear, which my hon. Friend the Member for Rutland and Melton (Alan Duncan) has previously expressed, is that the Treasury—or perhaps the Cabinet as a whole, having been induced to agree to the remarkable new policy—has taken the view that the simple solution is to have a look at the £22 billion of assets. It is very useful to have £22 billion of assets, which the Government can take care of by taking them into their coffers. The £29 billion of liabilities will therefore be added to that great stock of unfunded public sector pension liabilities that the future taxpayer already faces. Who knows what will be done to those liabilities? That option would be irresponsible and very short term.
	Alternatives are difficult. We faced those difficulties in the past with British Telecom and others. Given what is happening at the moment, more public money being spent in vast sums is unlikely, but there may be statutory guarantees in case the new entity goes bankrupt; British Telecom was placed on that footing when it was privatised. That idea is canvassed in the report, and it could be considered carefully by the Government. We need, and have today provided the opportunity for, the Government to address the pensions problem, now that two months have passed. We need them to tell us how they will face that problem, which, so long as it lasts, puts job security and service improvements in the Royal Mail in tremendous doubt. It is a tremendous threat to today's taxpayers, future taxpayers or both. How do the Government propose to address what Royal Mail has piled up on its desk?
	I conclude by going back to the main question, although I did not think that it would be the main question. Of course, I dwelt on this point when I started my remarks, but there is a most remarkable outcome of the amendment that appeared on the Order Paper this morning. Instead of having a comparatively low-key debate, as I thought we would, in which we would ask questions and Ministers would give details and some indication of when the legislation would come forward and what form it would take, we find that we are trying to ask what on earth the policy is at all.  [Interruption.] Well, a note of indignation comes into my voice.
	The Government are merely proposing that the House vote for the suggestion that the Government should address the pensions problem. Of course the Government should address the pensions problem; we have been saying that for two months. Exactly how do they propose to address it? The Government amendment
	"notes that modernisation in the Royal Mail is essential and that investment must be found for it".
	That does not sound as clear as Lord Mandelson was two months ago. I have never seen a more ridiculous statement of the obvious put on the Order Paper, but if the Government are inviting us to agree with the suggestion that investment must be found for the modernisation of Royal Mail, I suggest that they tell us what their proposals are for finding it, if they are abandoning the proposals that they had two months ago, when they had a private sector partner.
	The motion dregs everything up, including an attempt to compare the Government's investment record with the investment record of the Conservative Government some time ago; it is all our fault, apparently. That was more than 12 years ago. The motion is obviously written by a committee. It is obviously written with parliamentary process in mind. Indeed, the amendment winds up with the ringing reassurance that
	"legislation on these issues will be subject to normal parliamentary procedures."
	I do not know which Labour rebel needed to be reassured that the Government would at least allow Parliament a debate—a short, cursory one, no doubt—touching on the subject, or why a motion had to be passed to indicate that normal parliamentary procedures would be used to scrutinise the measures.
	I can only say that this is an important debate, Royal Mail is an important service, the service is in crisis, and the Government have produced a report that says that the universal service obligation may well not survive unless they address it now. It is a serious motion. The Government had a clear policy that we would support if they went back to it. I hope the Minister will say that he will cling to it. I hope he does not obscure all questions, going through an elaborately orchestrated regime where he tries to reassure rebels on the Labour Benches that the Government are not going to do anything at all. That would not be in the national interest. In the light of the Government amendment, the future of Royal Mail is a more urgent and worrying question than it was even yesterday when we tabled the motion.

Patrick McFadden: What I will say is that the maintenance of the universal service obligation—the six-day-a-week, one-price-goes-anywhere delivery—is extremely important. It is at the heart of the Hooper report and we are determined to preserve it.
	The US postal service has a monopoly on letters, and we have been urged by some critics of our proposals to examine it as an example of why the Government's proposals are not needed. It was recently reported to be heading for a loss of $6 billion after a fall in mail volumes last year of 4.5 per cent. That has led the company to ask Congress for permission to drop the Saturday delivery. Mr. John Potter, the US Postmaster General, said:
	"it is clear that the problems we are facing are intensifying...No one knows at what point mail volume will bottom out."
	Unlike in the United States, dropping the Saturday service is not a route that we want to go down. For the first time, our USO is loss-making, but we believe it is valuable to the public and to the small businesses mentioned by the hon. Member for Scarborough and Whitby (Mr. Goodwill). We want to maintain it and to make the changes necessary to do so, rather than consigning our postal service to decline.

Patrick McFadden: We all have an interest in this issue, and all right hon. and hon. Members' views on it are valid.
	Addressing the pension deficit is not an easy decision. If we do that for Royal Mail, taxpayers are entitled to ask what change they will get in return. How will taxpayers have confidence that the Royal Mail can make the changes it needs to make to cope with falling mail volumes and new technology? That issue is critical. As the Hooper report rightly says, only one company can deliver the USO; only one company can send a postman or woman up every garden path in the country six days a week. The health of Royal Mail matters, and we have to take the decisions necessary to secure its future.

Patrick McFadden: No, I must make some progress. Royal Mail has made some progress in recent years. Its performance in delivering first-class post by the following day has improved and some investment in new machinery has been made. However, it is still less automated than many comparable services. There is still a great deal to do, to secure not only automation but the delivery of new products. One example used in the Hooper report is walk sequencing—the last stage of post sorting before the delivery round. That is done by hand in the UK, while some competitors do 85 per cent. of that work by machine.
	Much has been made in recent weeks of the finance needed to make progress on the issue. I want to make two points about that. First, the £1.2 billion that the Government gave Royal Mail two years ago is a commercial loan, which much be repaid to the Government. Secondly, that form of finance is neither fast nor flexible. Even after lengthy negotiations between the company and the Government, two years on the European Commission is still deliberating about whether the financing is allowable under state aid provision. Royal Mail must not only complete, install and use the new machinery that it needs, but develop new products. The idea that the company's problems will be over if we lift the pensions deficit is wrong. The company needs ongoing capital and expertise to combine the use of mail with other technologies. We have seen too little of that in the UK. Partnership offers the opportunity not only to inject new capital into the business but to bring in expertise and the confidence to make the changes that the company has so far not made far enough or fast enough.

Patrick McFadden: And the Conservative party prides itself on knowing business. The difference between a majority and a minority shareholding is fundamental in business, and my point is that Royal Mail will remain a publicly owned company.
	If the work force fear the consequences of a partnership, I say this: industrial relations in the Royal Mail, as Hooper pointed out, are in urgent need of a fresh start. Change has been hampered by a lack of trust between management and work force. In 2007, as the right hon. and learned Member for Rushcliffe said, 627,000 employee days were lost as a result of industrial action, accounting for 60 per cent. of the total days lost to strikes throughout the whole UK economy in that year. It is not just a question of that major strike, but the threat of other strikes, too. Disputes are frequently threatened, such as those threatened on pension changes or mail centre changes, which we saw in recent months, and they are hurting the company. They slow the pace of necessary change, and they hurt the customer and the mail market, as people are tempted to switch to other digital communications to meet their needs. For everyone to agree that they are up for change in general, but to oppose it in the particular is no way forward.

Patrick McFadden: Hooper is quite clear that he believes that a valuable partnership will be with a postal or network company that has carried out changes such as Royal Mail needs. I cannot comment on every discussion that the Department has, but that is the recommendation in the report and the outcome that we seek.
	I wish to say a word about post offices. I know that the debate is about Royal Mail, but right hon. and hon. Members care a great deal about post offices. The closures of the past year were difficult for local communities, but now that they are drawing to a close, the network is in a more stable position. The Government made clear the future of the post office card account shortly before Christmas, and we are now working with the Select Committee on Business and Enterprise and Post Office Ltd to identify future new areas of business. The Post Office is partly a social and community service, and the network of about 11,500 branches depends on Government subsidy to survive. We will keep that network in 100 per cent. public ownership, although of course most post office services are delivered by sub-postmasters, who are private business people and often have their own businesses attached.
	Like many Members, I want the Post Office's banking and financial services offering to be expanded. It is a trusted brand and has more branches than all the banks put together, so it has real potential in that area. However, with post offices accounting for a little more than one tenth of Royal Mail Group's overall turnover and even that proportion depending on subsidy from the Government, we should not pretend that such an expansion can solve its problems.

Patrick McFadden: I am sorry, but I must end my remarks shortly.
	Let me tackle stamp prices. It has been suggested that another solution to the company's problems could be to increase stamp prices sharply. The price of a stamp will go up by 3p in April, and it increased by 2p last year. We must remember that customers have a choice nowadays, and steep price increases are likely to accelerate the decline in the volume of mail. Such steep increases do not, therefore, offer an easy answer to the challenges that Royal Mail faces.
	Royal Mail must take modernisation further and faster than it has done. It must diversify its operations against a background of volumes of mail falling between 5 and 8 per cent. each year. To achieve that, it will need investment over and above what it has been allocated.
	The debate rightly concentrates on the merit of Hooper's proposals, but let me make one thing clear: if we do not act, the pension trustees, in the face of the new valuation, could ask for changes such as vastly increased company contributions to recover the deficit, thus placing further strain on Royal Mail, or vastly increased amounts of money from the Government for the escrow account, which acts as insurance and security for the pension fund. The Government cannot simply sign such a cheque without knowing that Royal Mail is on a more sustainable track for the future.
	Unless modernisation happens, the company will be ill equipped to deal with its challenges. It will be faced either with increasing prices, thereby worsening e-substitution, or a decline in the quality of service, possibly with the same result, and threatening the universal service obligation, which we are trying to protect. Of course, it would be nice if we could make the issue go away, but that would not present a solution to the Royal Mail's problems. There has been a pattern in the past of settling rather than resolving difficult issues. That is why it is important to have a coherent package for the problems that Royal Mail faces, and that is what we have set out.
	We will not fall for the less-than-canny motion from the Opposition, which is silent about many of the company's challenges. Instead, we have set out a plan, which says no to the privatisation of Royal Mail; yes to keeping it as a publicly owned company; yes to pension security; and yes to a new system of regulation with the USO at its heart. Any legislation to implement those proposals will be fully and properly debated by the House. On that basis, I ask my colleagues to reject the Opposition motion and support the Government amendment.

John Thurso: I am grateful for the opportunity to discuss the Hooper report. When the statement was made, I said that it was important to debate the matter fully. Indeed, if ever an issue deserved a pre-legislative scrutiny process, surely this is it.
	Richard Hooper and his team have done an excellent job with the report, which is thoughtful and thorough. Whatever one's views of some of the individual points, the general thrust and conclusions cannot be ignored. Let me begin, therefore, by looking at the principal points, which are helpfully set out in the "Headlines" section of the report. Let me deal first with the universal service obligation. It is fairly hard to conceive of a report saying that the USO should be disposed of, but there were options for diluting it. I am extremely glad that Hooper rejected all those options. Not only does the Hooper report recommend the maintenance of a six-day-a-week USO to all addresses in the United Kingdom—I would qualify "all addresses" as "the vast majority of addresses"; a Mr. John Ridgeway on the Ardmore peninsula is still waiting for the resumption of his deliveries—but it points out that the USO is very much part of the economic and social glue of our country. The USO must remain a six-day obligation, its coverage must be as near as possible to 100 per cent. and, as has been pointed out, it needs to be affordable. The report draws the clear conclusion that to maintain that kind of USO is not possible under the Royal Mail's current arrangements and in the face of competition from other media, particularly text messaging and e-mail.
	The second point is the need to deal with the pensions deficit, which continues to balloon, having been around £3.4 billion in March 2006. Hooper reckoned that it was around £5.9 billion, and given the movements of the markets, it has probably increased substantially since then. Both the deficit and the deficit payment are a serious drag on the company. Of the 13.5 per cent. gap that Hooper identified between Royal Mail's operating profit and the operating profit of the continental companies that he believed to be most efficient, 4.3 per cent. was made up by the catch-up deficit payment.
	Thirdly, the report emphasises the difference between postal services—that is, the Royal Mail—and post offices, and recommends that post offices should remain wholly in public ownership. That is a point with which I agree entirely. Hooper does not go any further on post offices, as that was not in his remit, but the report must be an opportunity to put the post offices on a sound footing. I shall return to that point in a moment.
	The fourth point that Hooper made relates to regulation. It is absolutely right that regulation should be dealt with, and I think that Ofcom is the proper body for that. Fifthly, the report makes it perfectly clear—virtually everyone agrees with this—that the status quo is not an option. Royal Mail needs to change and modernise, and it needs to face external competition from outwith mail services. It needs, in Hooper's words, to transform and diversify. The conclusion reached is that achieving that requires introduction of expertise through a partnership management agreement with one of the private companies, which will bring commercial confidence, instil better practices and create the ability to acquire and access private capital. In that regard, the Government have indicated that they favour a sale of a minority stake in Royal Mail to a private partner. That raises some questions that need clear consideration.
	I shall come to those questions in a moment, but let me first touch on the motion before us, which the right hon. and learned Member for Rushcliffe (Mr. Clarke) moved. Broadly speaking, his motion says: "We agree—bring it on," to which I say: how wonderfully retro. What a thorough cast back to Thatcherism—indeed, it is Thatcherism that even Mrs. Thatcher would not have agreed to. It is privatisation of the "Chuck 'em all out into the cold hard world, the cold waters of competition and commercial reality and the job's done" kind.
	Of course, it helps the right hon. and learned Gentleman that the Conservative party is broadly a policy-free zone on the Royal Mail. I could certainly find nothing published on the Conservative website, although admittedly there may be something else, apart from the helpful admission made by his predecessor, the hon. Member for Rutland and Melton (Alan Duncan), that the Conservatives will continue to close post offices, as they did under the previous Administration. It is a shame that the right hon. and learned Gentleman chose to paint such an uninspiring and rather passé picture. It is certainly not one that I would ask my colleagues to follow.

John Thurso: I am extremely grateful to the right hon. and learned Gentleman for that intervention. I draw his attention to the amendment that I tabled, which is a fairly accurate reflection of the policy that we adopted at our conference three years ago, which I believe is widely available. I shall come to that point in some detail in a moment.
	I want to look at the opportunities that flow from the report. The first is the real chance to help the post office network. I again want to make the distinction between the Post Office and the Royal Mail. Many of our constituents think that they are one and the same thing, but there is a real difference. Hooper recommends that the post office network remain in the public sector, with which I wholeheartedly agree, but I believe that we should go beyond that. We should take it out of the Royal Mail group and make it a separate entity, with a separate board dealt with by the shareholder executive, so that it is clearly and distinctly separate from the Royal Mail and from whatever might happen to it. I would also like that board to have some stakeholder representation, particularly by sub-postmasters, as that would help to inform its future. A key point would be for the post office network to be a separately owned and managed entity that was not bound up in whatever future the Royal Mail might have.

John Thurso: I have indeed discussed the potential for putting contracts into post offices with my own local authority, the Highland council. It pointed out that it had very good service centres, but that some areas were not covered by them. There is certainly room to look further into that, so the hon. Gentleman has raised a good point.
	Let me deal now with the Royal Mail. It seems to me that allowing an entity somewhere simply to take a minority stake to become a business partner combines pretty much the worst elements of all worlds. If it is simply a matter of gaining access to capital and nothing else, there is a range of alternative mechanisms for accessing private capital—non-voting equity, bonds, preference stock, which the Government love at the moment, loan stock and so forth. There is also the possibility of creating a 50:50 joint venture—in other words, doing nothing about Royal Mail itself, but creating a 50:50 joint venture with both sides placing into it what they want.
	There are many ways of dealing with the problem, but one of my worries about taking a minority stake is how it can be valued, particularly at this time in today's markets. How do we decide how much it is worth? How much equity is sold for what price? If the stake is to be 10, 25, 35 or 49 per cent.—there is quite a difference between those numbers—we should bear in mind that a single minority shareholder will not go sticking his money into a company unless he has what is known as a shareholder's agreement, which sets out the terms that apply, making it clear whether and when the public side—the Government—can or cannot do certain things. With all those points unresolved and undiscussed, the claim that the Government's proposals offer secure public ownership seems to me to be ever so slightly disingenuous.

Peter Luff: If I understand the hon. Gentleman correctly, what he is citing as a problem is actually one of the strengths of the proposal, as it will actually commit the Treasury to behaving in a responsible way towards the Royal Mail Group, which, frankly, it has not done for 20 years.

Peter Luff: It is a pleasure to follow the right hon. Member for Leicester, West (Ms Hewitt), who made a characteristically thoughtful and well informed contribution, which was marred only by one brief lapse into partisanship; although I speak as Chair of the Select Committee on Business and Enterprise, I hope I speak for the whole House when I say that we all support the universal service obligation.
	My Committee is in the middle of two relevant inquiries into this subject. One deals with the Hooper review and mail services—we are having a further evidence session next week with Royal Mail and Postcomm—and the other one, to which the Minister referred in his opening remarks, deals with the future of the post office network. I urge hon. Members from all parts of the House to give us their views about the options for sustaining the future of that network. All this means that my hands are a bit tied in this debate—I have no reports from my Committee on which to rely, so I must be slightly restrained in the expression of some of my views.
	It is important to acknowledge, as this debate has, the huge range of problems facing Royal Mail in particular, as opposed to Post Office Ltd. They include: poor industrial relations; the growth of electronic communications and the recession, which together mean declining mail volumes in the UK—those volumes declined by 2.5 per cent. last year and are projected to decline by 4.5 per cent. this year and by 8 per cent. next year; and a failure to invest over at least two decades—my argument with the Government amendment is that it singles out the Conservative party for attack, but this Government also bear some responsibility for the failure to invest—which needs to be addressed now.
	Further problems include: a very rapid growth in competition for business bulk mail—it has perhaps been more rapid than Postcomm recognised, although it has not surprised me; serious doubts about the effectiveness of the regulator, which, let us not forget, thought, during the recent price review, that mail volumes would grow; conflict between the twin regulatory objectives of the universal service obligation and competition—I welcome the fact that the Government amendment talks about the USO in such clear terms, because that gives guidance to the new regulator; a massive pension deficit, to which reference has been regularly made; and problems, which have not been mentioned today, over pricing of the competitors' access headroom arrangements—the so-called final mile. If I had the time, I would explain to the House how that actively disincentivises efficiency gains by Royal Mail group.
	Of course, that leads to the most urgent need, which is for capital and expertise in order for the organisation to modernise and compete. I think that all in this House accept—I hope we do—the Hooper review's principal conclusion that the status quo is not tenable. That brings us to the three crucial issues in the review—pensions, the partner and Postcomm. There is a vital fourth one—the need to secure better industrial relations in the company. I shall not talk about it today, but it is an overriding issue that must be taken into consideration.
	I have reservations about the proposed merger of Postcomm with Ofcom, but I accept the logic and it is probably the right thing to do. The Committee will look at the merger carefully, because there is a serious risk of regulatory overload on Ofcom. It is already charged with the complex issue of telecommunications regulation, although in Europe most regulators share postal services and telecommunications responsibilities. Ofcom also has the whole broadcasting arena to deal with, which often takes up a lot of time. Jonathan Ross can trump some important strategic issues concerning how the other aspects of Ofcom's work should be regulated.
	The Government have a problem with regulators generally. They tend to describe regulators as independent and delegate too many policy decisions to them. The regulators must be economic regulators, and the Government must set the policy framework, which is why I welcome the statement about the universal service obligation in the Government's amendment. We must be clear that Ofcom, when it becomes the postal services regulator, should not be required to take too many public policy decisions, which should be the preserve of Ministers.
	Broadly speaking, the regulatory aspects will not be too controversial. The pension deficit, however, raises more difficult questions. The Government want to enter into a hugely expensive commitment, which will be a huge commitment for the taxpayer in the long term. I am trying to get to the bottom of why the pension problem is so bad for Royal Mail group. I suspect that the real explanation is that it is an exemplar of the bigger, hidden problems throughout the public sector. Because Royal Mail is a trading company and has to be transparent about its pension fund, it has to explain the issues with it, but I suspect that similar issues lurk all over the public sector and Royal Mail's problems are not that unusual. Of course, any transfer of the pension deficit to the Exchequer will be subject to EU state aid scrutiny. The precedents are reasonably encouraging—there are different pension arrangements in France, but when La Poste transferred its pension deficit to the state, it did receive clearance, albeit in slightly different circumstances. One very important point about the transfer of the pension deficit is that any settlement must be reflected in the price paid by a new partner or partners for a stake in the company free from that debt.
	I turn now to the crucial question of the partner. Is it just a matter of ideology—public good, private bad? I confess that my preference is for commercial activity to be undertaken by the private sector, but hard questions have to be asked. If the strategic partner is an existing mail operator, is the loss of competition in the market a price worth paying? Does the doctrine of unripe time apply? It does not seem an especially good time to hand over capital raising to the private sector. By the way, if a 30 per cent. private stake in RBS means that it is a private company, how does a 30 per cent. private stake in Royal Mail make it a public one? I have some intellectual difficulty with that.
	Hooper says that a partner is needed for three reasons—capital, expertise and political stability. The Committee will need evidence for that claim, and especially for why all three objectives can be delivered only by the one mechanism of introducing a private sector partner. On the first—capital—the state is providing capital at present and we have discussed that with the Minister. It is provided on commercial terms, as it has to be, but—as he explained—it has not had EU state aid clearance yet. Big questions would be asked about any further applications for capital from Royal Mail group, and they might not receive favourable answers.
	The second reason is expertise. I thought that Allan Leighton and Adam Crozier were brought in to provide expertise. The right hon. Member for Leicester, West (Ms Hewitt) suggested that expertise was needed throughout the organisation, and that may be the explanation. In the past, the Government have sought to address the expertise question by bringing it in from the private sector.
	On political stability, I understand the point that having an arrangement with a private sector partner locks the Treasury into a new, fairer way of treating Royal Mail. Richard Hooper made a great deal of that point in giving evidence to the Committee a few weeks ago. But is there another way of achieving that political stability, which the company clearly needs and has not had for far too long?
	My instincts are with Hooper, but I understand the concerns that have been expressed. The Government have to produce compelling, evidence-based reasons for the approach. Royal Mail will be an attractive business without a pension deficit, with a more intelligent regulator—people are critical of Postcomm—and with the USO to give it market dominance. So if it is a bad time to raise capital, it is also a bad time to price an asset such as Royal Mail when it is freed from all its obligations in this new world. I hope that the price will at least include an earn-out over several years, to ensure that the taxpayer's interests are properly looked after. On a happier note, however, we must not forget that a 70 per cent. holding should still mean a flow of dividends back to the Treasury for a very long time.

Geraldine Smith: I am delighted to have an opportunity to vote today against the part-privatisation of Royal Mail. I am not too sure that I could vote for the Minister's speech, if there was a vote on it, as he also seemed to be talking about part-privatisation, but the Government have tabled a sensible amendment and I will support that.
	There is great strength of feeling about this matter. One hundred and thirty Members of this House, most of them Labour, have signed an early-day motion opposing postal privatisation, but the strength of feeling is not confined to Parliament. An independent public opinion poll recently found that 75 per cent. of people who had heard of the possibility of Royal Mail being privatised opposed the idea. When respondents were asked about the possibility of foreign ownership, the proportion strongly opposing the partial privatisation of Royal Mail rose to 89 per cent.
	I represent a large rural constituency, and people there realise that part-privatisation means higher prices and reduced services. The actual cost of sending an item from London to the Isle of Skye is £28, so I can understand why the Scottish National party has concerns about partial privatisation. There has been talk of dinosaurs, but the only dinosaurs are those people who do not realise that privatisation is going out of fashion. We have had to rescue the fat cat bankers who got us into so many difficulties and we are nationalising the banks, so privatisation is not the British public's flavour of the month.
	The Hooper report is flawed. Hooper admits that there is no agreement between Royal Mail and the regulator about the business's basic operating costs, but at no point does he seek any independent costings. How can he reach conclusions on a business when he does not know the cost of providing the service?
	Earlier the Minister said that the universal service obligation was making a loss, but the regulator said that it was making a profit. Between 1981 and 1999, Royal Mail was forced to hand over £2.4 billion in profits. The then Conservative Government starved it of investment at a time when other European countries were investing in their postal services. They were modernising and automating their postal operations while the British Government were taking profits away from the business. Moreover, contributions holidays meant that the employer did not contribute to pension schemes for many years.
	Recently, the UK has gone ahead of the European Union with postal liberalisation. We have allowed private postal companies like TNT to come in and cherry-pick all the best business, yet Royal Mail cannot enter those markets because they are closed. TNT has retained a monopoly on mail of less than 50 g in weight: Royal Mail cannot touch that, but TNT can come in and take our profits.
	We need a fair pricing policy for Royal Mail. The Hooper report acknowledges that prices in the UK are low, relative to many other European countries. For example, to send a first-class item weighing 100 g, Post Danmark charges three times the Royal Mail price. Sweden's Posten and Belgium's La Poste both charge more than twice that, while Deutsche Post and TNT deliver a letter of 100 g for around three times the price charged by Royal Mail. So we know what is going to happen to postal rates for the general public in this country when the private sector gets involved.
	The UK is also the only European country to operate a peculiar form of downstream access arrangements that have led Royal Mail, and therefore the British taxpayer, to subsidise the businesses of private competitors. Royal Mail delivers items at a loss: what business with true commercial freedom would be obliged to accept that it made a loss on every item? That is nonsense, but the regulator fixed a price, and what the regulator knew about postal services could be written on the back of a postage stamp.
	Some £2 billion has been lost in revenue in the past five years, because during the price control period postage rates were held at an artificially low level as a result of Postcomm's mistaken forecast about the failure of mail volume growth. Postcomm got it wrong and, as a result, Royal Mail lost £2 billion, but Hooper refuses to take a view on pricing. He just defers the decision, and no one seems to be mentioning the issue. Pricing has not been taken into consideration, and what Royal Mail really needs is a fair pricing policy. Despite all those challenges, this year Royal Mail has managed to make a profit of £255 million; that is just for one quarter. That is compared with a figure of £162 million for the whole of 2007 and 2008.
	What is the solution for Royal Mail? First, the Hooper Report has taken no account of the impact of the recent 3p tariff increase in assessing future profitability; that has not been reflected in the costing. Changes to downstream access are certainly needed. That could stem the loss of revenue to private competitors, and turn Hooper's projected profit forecast from red to black. If the Government took responsibility for the pensions deficit, as they have said they will, Royal Mail would save an additional £280 million a year for the next 15 years. Keeping the company wholly in the public sector would mean that the money could be used for future investment, rather than just profit taking.
	Finally, there needs to be greater investment and modernisation. That can be achieved if Royal Mail starts spending the £600 million that it has already borrowed from the Government to modernise. I actually speak to postal workers; I spoke to a Communication Workers Union area delivery representative, and found that no one had even approached him about walk sequencing. As for the CWU nationally, the unions have not been approached about all that new technology. When they have been approached, agreements have been reached. In the past few years, 40,000 Royal Mail jobs have been lost, so we are talking about a union that is prepared to make hard choices.
	We need a bit of information in this debate. Too many people are making statements who know very little about the operation of the British postal service. As for new, fresh, British top management, I think that the gene pool is wide enough for us to find those people in this country; we do not need foreign managers. Is my right hon. Friend the Member for Leicester, West (Ms Hewitt), suggesting that we employ 11,000 new managers—that we sack all the existing management and bring in Dutch managers? What does she mean? What are the practicalities? It is nonsense. We need British management—

Charles Hendry: It is a great pleasure to follow the hon. Member for Morecambe and Lunesdale (Geraldine Smith). I do not agree with much of what she said, but she has been a doughty and determined defender of postal services in this country. It is sad that we have to hold a debate about the very survival of one of the most loved services in this country. There is no doubt that Royal Mail has been an incredibly highly prized service. The concept of the universal service obligation means that post is delivered to every single house every day. Royal Mail has an excellent delivery record, as the hon. Lady said, certainly in comparison with many other countries, and the price has been very favourable, given the cost of delivering letters.
	The sadness is that, at best, the Government have allowed the service to wither on the vine over the past 12 years. At worst, we could say that they have comprehensively trashed it. First, the Government did not secure a level playing field. International operators can come to the United Kingdom to take some of the most lucrative parts of the business, perhaps making them loss leaders before making further advances later. British postal services cannot provide those same services in other European countries. The Government have been negligent in not pushing the issue further and not seeking a level playing field for Royal Mail overseas.
	Secondly, the Government are guilty of not having had a vision for the postal service and Royal Mail more generally. As a consequence, the management of Royal Mail have been left to manage the decline of the service. We have lost the Sunday collection. The first—indeed, the only—post arrives later and later, and the second delivery has been cancelled altogether. We have seen Saturday collections being moved to earlier times. I went past a post box the other day where the last collection on Saturday was at 9.15 am, so gone is the late morning collection, gone is the Sunday collection, and it is no longer the convenient service that it used to be.
	We must be fair and say that that is not the responsibility of the managers. They have been trying to manage a difficult business through difficult times and they faced a triple squeeze. I pay tribute to Adam Crozier for much of the work that he has done and for his genuine zeal and enthusiasm to deliver a 21st century service. He has been squeezed by the financial pressures that we heard about in the excellent speech from my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), by the huge pension fund deficit, which would technically make the Royal Mail insolvent, and by increased competition both from other services such as e-mail and from other operators.
	Equally, we should not blame workers. There are, of course, major problems in some of the cities, but the postal workers in my constituency are incredibly diligent, hard-working, enthusiastic people who provide an outstanding service. From my contact with them—people who have worked in Royal Mail for many years, in some cases 20 years or more—I know that they want to deliver a continuing good service in the years to come and they recognise the need to modernise. The challenge will be to carry them with us during that period of change.
	It is right that the Business and Enterprise Committee will be asked to look into how the Post Office can offer services more akin to those of the financial services offered by banks. I agree with that because we suggested it. It was the Opposition motion last year that suggested that post offices should offer a wider range of services, but the Government Whips marshalled their troops to vote it down.
	The sadness and the irony of the situation are that a Government with vision would have decided on the services that Royal Mail and the Post Office could offer, before deciding to slash and burn their way through the post office network. The process should have been completely reversed. We should have looked at how we could extend the services and how post offices could offer more services to the community and then determined the size of network necessary to deliver that, rather than doing it the other way round.
	That is the charge that goes to the heart of the Government's failings. There has been no vision of how to go through the process, and they have ended up confused and unable to see their way forward, as was evident from the Minister's speech today. Royal Mail needs a massive injection of finance. It needs to modernise its processes and to invest in reskilling its work force. It needs to address the pension fund problems, about which we have heard so much. It needs to be able to compete with well-resourced international businesses.
	That means that there must be a new approach, and part-privatisation must be part of that process. There must be an opportunity to engage the work force and there may, therefore, be opportunities to involve them as shareholders in a revitalised business. But the Minister must accept that what the Government propose is part-privatisation. It is not full privatisation, but bringing in other investors is, by definition, part-privatisation. He should have the courage to say to the House that that is what the Government propose. We will support him in delivering that, because it is the only way to deliver the change that this vital service needs.

Dai Davies: I shall be very quick, Mr. Deputy Speaker, so that more Members can speak.
	I echo the sentiments of the hon. Member for Morecambe and Lunesdale (Geraldine Smith); I only wish that she had had as much time as the Front Benchers. I want to make four quick points. First, the Government said that they were in no rush, and I urge them to leave the decision until the next general election, to put it in their manifesto and to let the people decide. In my constituency, the people want the Post Office and Royal Mail to be kept in public ownership.
	My second point is that we all agree on the need to modernise, but where have we been? We talk about the equipment that Royal Mail has to use. Where have we been in changing that, and what has the chief executive done to bring that about? What have we paid him for not doing it? Huge amounts of money.
	Thirdly, a level playing field has been mentioned on numerous occasions. The post office in my constituency delivers for the last two miles, which is the most difficult part of the delivery. The TNTs of this world—the private companies—get the cream, while the people at the sharp end are left with a really difficult job. I urge any Member who has not visited a sorting office or walked some of the patches to which our postmen have to go, to give that a go. Has Hooper done it? Did he visit the sorting offices and speak to the posties? He certainly did not do so in my constituency.
	Fourthly, we have seen what greed has done to the banks; the drive for profit and more money has almost destroyed the financial system of this country and across the world. I urge the Government to consider that, and not to allow the same to happen to Royal Mail.

Albert Owen: I welcome this debate on Royal Mail. I also welcome the shadow Business Secretary, who is no longer in his place, to his new role. I can understand why he has been brought into it, because he was certainly entertaining, and the Conservative party needs an entertainment officer as they have not had one on such issues for some time. I did not realise that he had been in charge of the Post Office. I remember disagreeing with him when he was in charge of health, education and the economy. However, I agree with him on many issues, including Europe, and I agreed with him when he told Mrs. Thatcher that it was time to go. It is a shame that he is not in his place, because I am trying to offer him some warm words. Nevertheless, I cannot agree with his motion because, as my hon. Friend the Member for Nottingham, East (Mr. Heppell) said, it is just mischief-making, and this is a serious debate about a serious issue.
	I welcome many of the interesting recommendations made by Hooper in his report, particularly on the universal service obligation, which is very important to areas such as mine which are on the periphery and rely on the six-days-a-week service. We do not have very fast broadband and a poor gas network, but at least we have our USO. We need the post delivered on time in a daily fashion like the rest of the United Kingdom.
	When the Business and Enterprise Committee considers the details of the future of the Post Office, I urge it to develop the issues that the Government have raised about establishing better financial services for the Post Office network. That is a good idea, and it has come not only from the Conservative party; it has consensus around it. Among the best services that the Post Office provides is the exchange service for the pound against foreign currencies, where it has been very successful.
	On the post office card account, the Government were right to provide that security and foundation to the post office network for the future, and we need to build on that. Given the crisis in the financial sector, the trusted brand that is the Post Office is a good way of providing such services to local communities across the United Kingdom of Great Britain and Northern Ireland.
	I do not have much time left to give an alternative to what has been said about this issue being just about privatisation and the public sector. There are other models that the Business and Enterprise Committee and the Department should consider. In Wales, we all get water provided by Glas Cymru, which is the owner of Welsh Water. It is a not-for-profit organisation—a company limited by guarantee. It provides an excellent service, and Hooper dismisses it too quickly in his report. It is a successful model that could be used in delivering monopoly services such as mail, although I understand that there is the issue of European regulations. Its activities are funded and financed by bonds. It has within its organisation specialist contract partners employed by Welsh Water following a procurement process.
	That business model improves service delivery by employing the best contract partner for each distinct activity within the business. Looking at the postal business globally, I can see that type of model helping to deliver services. It is an example of the kind of partnership within a monopoly that Hooper dismisses so quickly. The company also has the unique distinction of paying annual bonuses to its customers—dividends are given on annual basis by reducing the bills—and it is able to get guaranteed loans over a period whereby it can reinvest in the company infrastructure. That is also worth considering when we talk about universal postal services. This is not about private versus public alone; we need to go beyond that.

Albert Owen: I was not going to go down that partisan route, but I do worry about privatisation and the Conservatives. Royal Mail is the only organisation left that they did not privatise before, so it would be the first to go if they came back to office; they would start where they left off. The railways are a good example of the mess that they made. I am quite pleased, however, that we brought Network Rail back into public ownership as a not-for-profit organisation. It works side by side with private train operators, which is why I am suggesting an alternative model where a not-for-profit organisation is used to deliver a quality service and product to all customers. That should be the basis of what we do.
	We tend to have dogmatic and ideological debates on such matters, but at the end of the day, we often forget that the Royal Mail is there to provide a service to the public. I do not think that nationalisation or public ownership are dirty words, and the intelligent way forward in this debate is to look at alternative models. Hooper made a huge mistake in dismissing alternative models that work in this country, models which are regulated, which provide a high standard of service and which provide investment for the future. The risks involved in providing water are quite huge, but through such a model, Glas Cymru is able to invest for the long term by getting guarantees. We are giving guarantees to the banks and to everyone else.
	The Treasury should look seriously at the model that I am suggesting and look at what Glas Cymru is doing. It is delivering a public service through a not-for-profit model that provides a good standard of service for the people that I represent and for all of the people of Wales. That model can be rolled out across the whole United Kingdom.

Robert Wilson: I am pleased to have the opportunity to contribute to this important debate, and I shall try to be quick because I know that others want to speak.
	In common with many areas of the country, my constituency of Reading, East has not been immune to the failings of the Royal Mail. For the last couple of years, I have been involved in a campaign to prevent the local sorting office from closing. That has had an impact on workers; we are losing hundreds of jobs because of the closure. Many people have already been laid off and hundreds more have been, as they put it, left hanging in limbo. The Royal Mail is moving the office to a £20 million mail centre in Swindon, and despite my best efforts to save those jobs—indeed, I arranged an all-party group to see the previous Minister responsible for postal services, the hon. Member for Poplar and Canning Town (Jim Fitzpatrick)—I have unfortunately been unable to put a halt to the process. I have had regular meetings with employees, and I held a surgery recently at my local sorting centre. It is clear to see the human impact of the failings of this commercial organisation, and if change does not take place, even more jobs will be lost in the years to come.
	The closure is due, in part, to the failure of the Royal Mail's national management. It has failed to get a grip on many of the problems that it has faced over the past decade. In Reading, as in the rest of the country, one of those problems is the fact, mentioned by many hon. Members, that the technology used is seriously behind the times. The Royal Mail chose to close its sorting centre in Reading to move to Swindon and, consequently, hundreds of people have been left out of work.
	I turn to the Hooper report, which was published at the end of last year. The review makes it clear that one of the principal threats to the Royal Mail comes from technology and the massive explosion in digital media, the internet and mobile technology. As many have said, that has prompted a substantial decline in the number of letters being sent by consumers. Another factor is the Royal Mail's outdated sorting procedures, as compared with those of other European countries. When I met the Minister responsible for postal services last year, I pressed him hard on that point. I repeat what I said to him then: modernisation is crucial to the Royal Mail so that it can compete properly in the wider market that is now open to all European competitors.
	As I said, my local sorting office on Caversham road is unfortunately going to close, but I believe that the Minister probably now accepts that there is an urgent need for considerable investment in new sorting equipment. Otherwise, many other sorting offices around the country will close and more jobs will be lost.
	Poor industrial relations have dogged Royal Mail for years, and the disputes that have come about as a result are well documented. In my constituency there have been local tensions between the management and the Communication Workers Union. Such disputes are holding back Royal Mail, and I appeal to the CWU and the management of Royal Mail to stop their endless conflicts and get on with saving and modernising the business. That is clearly what most employees want.
	The most high-profile recommendation in the report is that Royal Mail should be part-privatised. The Minister seemed to get in a bit of a state about whether to admit that it will be privatised. That is recommended so that the expertise and capital investment necessary to modernise the business can be brought in. The opportunity to use that private capital and expertise will improve postal services and could give Royal Mail a new lease of life by enabling it to compete with other companies on equal terms.
	Nearly two months after the publication of Hooper's proposals, the Government are still yet to provide serious details—the meat on the bone—of what they actually intend to do. It is about time that we began to hear their detailed plans. If we do not, there will be more damaging speculation about what the future holds and more uncertainty for the employees of Royal Mail.
	We all know that Royal Mail faces very serious challenges and is grappling with the process of modernisation. The Hooper review argued strongly that now is the time to act, and it is clear that the status quo is no longer tenable. It is time for Royal Mail to modernise, or it will face continued decline. I hope, for its own sake and that of its remaining workers in my constituency, that it is given the opportunity to thrive again.

Joan Walley: In the very few minutes that I have, I wish to make the point that an Opposition day, when the Opposition want to make political capital—despite the situation in the Thatcher years, with which we are familiar—is not the time to have a debate on such an important subject as Royal Mail and the delivery of postal services.
	I have looked carefully at the Government's amendment, and there is nothing in it that I disagree with, so I have no problem with it. However, I do have a problem with what my hon. Friend the Minister said about the direction in which we are going on the Hooper report's recommendation 13 on bringing in a private partner. That leads to the suggestion that we have partial privatisation on our hands. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) mentioned the possibility of pre-legislative scrutiny, which might be a way of trying to deal with the current problems.
	One problem is the way in which Royal Mail has been starved of investment. As my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) pointed out, about £2.4 billion of profits went to the Treasury under the external financing limits. That money should have been invested in Royal Mail. The liberalisation has been carried out in haste, so Royal Mail has not properly been able to compete with European competitors, and we have been at a disadvantage.
	The problem is how to make good the legacy of the wrong decisions that have been taken in the past. Somehow we must deal with that problem and secure the long-term commitment to the universal service obligation, and we must also find the money for investment in pensions so that delivery people all over the country, including in my local office in Burslem, know that the Government are protecting and safeguarding their pensions.
	I genuinely recognise that balancing all that with the need to act quickly on the modernisation agenda will not be easy. The Government could use the Hooper report as a starting point. Negotiations could also take place with the Communication Workers Union, which in its detailed response of more than 60 paragraphs stated that it wants to work with the Government to find a way forward. However, if that way forward is bound is by recommendation 13, which states that the only method of proceeding is through the private sector, I tell the Under-Secretary of State for Business, Enterprise and Regulatory Reform, my hon. Friend the Member for Dudley, South (Ian Pearson), that it is wrong way. Although we have assurances that further legislation will be introduced, and that Parliament will have an opportunity to debate it, we need to put investment in place now. My hon. Friend the Member for Ynys Môn (Albert Owen) suggested that there are other ways in which to proceed. The private sector has no monopoly on the right way to bring in expertise to transform the Royal Mail radically.
	Whatever has been said about Adam Crozier and whatever he may have done for the premier league, he has not got back to me directly about individual issues that I have raised with the Royal Mail about management. We must recognise that the Government own the Post Office, and it is not good enough for Ministers to say that they cannot interfere in operational matters.
	The Hooper report, which was published in December, is already out of date. It took evidence during the credit crunch, and the easy, not very detailed recommendations that it makes about the way forward with a private sector partner are not right. I urge my hon. Friend the Under-Secretary to reconsider and involve hon. Members of all parties in finding a way forward, so that I can tell people in the Burslem delivery office that the Government are examining their needs.

Jonathan Djanogly: Let me repeat the shadow Secretary of State's earlier remark that we welcome Richard Hooper's review of the UK postal services sector. Published on 16 December, with the title "Modernise or decline", it provides a worrying statement about the desperate condition of the Royal Mail today. Simply, it states that the status quo is untenable. Sadly, that conclusion comes as no surprise to the Conservative party. As my hon. Friends the Members for Wealden (Charles Hendry) and for Reading, East (Mr. Wilson) noted, it confirms what we have feared for a decade: the Labour Government's negligence in failing to address the vital issues that face the Royal Mail has allowed it to slip down the premier league of European postal service providers.
	We are faced with a stark choice: the Royal Mail must modernise or decline. Mr. Hooper's review has at last forced the Government to accept the need for reform—at least that is what we thought from Lord Mandelson's response to it, and I think that the Minister, after some interrogation, ended up taking the same view in a roundabout manner. I still do not know where the Liberal Democrats stand; I think that they sort of support the report but do not like third-party voting—or something.
	However, survival alone is not what Conservative Members hope to achieve. We share Hooper's belief in having a positive future for the Royal Mail if the right actions are taken. Given the urgency, why have not the Government seen fit to publish proper details of their plans? Before encouraging prompt action, we must see clear and acceptable proposals. All we currently have is a set of hollow statements by Lord Mandelson in the other place, and a promise that he would provide a full statement early this year.
	I remind hon. Members, especially the hon. Member for Stoke-on-Trent, North (Joan Walley), who strangely accused us of dithering, that we are already well into February, and yet no comprehensive details of Government policy have been released. We do not know whether Ministers fear the dissent of their own party, or whether the Government have been unwilling or unable to formulate a policy. Either way, that is indicative of a Government in disarray and lacking in direction or leadership.
	Perhaps we need to look at Labour's manifesto, in which the party commits to a publicly owned Royal Mail, or the Warwick II deal, as mentioned by the hon. Members for Morecambe and Lunesdale (Geraldine Smith), for Ynys Môn (Albert Owen) and for Stoke-on-Trent, North, to ascertain why Ministers minimise the public air time they give their part-privatisation proposals. We note the 131 Members of Parliament who signed the anti-privatisation early-day motion. However, the issue is ultimately for Labour, not us. What we are interested in is saving the Royal Mail and checking that the Government have the policy, the resolve and the leadership to deliver on that. At the moment, we have no such confidence. Are they, as my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said, buckling at the knees?
	We on the Conservative Benches understand Mr. Hooper's concern that there should be a sale of a stake to a strategic partner, so we welcome Lord Mandelson's endorsement of partial privatisation. If we are to reverse the downward-spiralling fortunes of the Royal Mail, strategic outside input is, we agree, essential. However, as the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) and my hon. Friend the Member for Mid-Worcestershire (Peter Luff) said, important questions remain unanswered in relation to Lord Mandelson's vague proposals.
	What form will a partial privatisation take? How much of the Royal Mail do the Government intend to privatise? What price, if any, will they charge for such a stake? Who will keep the sale proceeds—the Royal Mail or the Treasury? What type of partner do the Government want for Royal Mail and will any partner be obliged to invest in the company? As my hon. Friend the Member for Wealden said, will the Government also promise that the sale process will not break down into the kind of farce that they delivered in the tender process for the Post Office card account?
	Although we support the concept of some form of outside ownership, our support for the Government's partial privatisation proposals is not unconditional. The proposals must not be just a convenient way to flog assets to prop up a Government on their last legs and desperate to reduce their debt pile at any cost. We agree with Hooper and Lord Mandelson that, in finding a solution, three interdependent aspects must be carefully considered.
	First, any new partner to the Royal Mail must introduce some much-needed commercial confidence. As admitted by the Minister, at present, bureaucracy and internal conflict, which includes a long history of—let us face it—terrible industrial relations, frequently paralyse the Royal Mail when it comes to making decisions and bringing about change. That is particularly the case with modernisation. As the right hon. Member for Leicester, West (Ms Hewitt) pointed out, new sorting machinery is on the way, and the Royal Mail network will be subject to a review as a result. However, few at present consider that the Royal Mail is equipped to bring forward such vital changes. We were pleased that the Minister accepted that outside experience will be invaluable in moving the Royal Mail ahead, although we consider that a careful review of the qualifications of any third party as a strategic partner will be essential.
	Secondly, the Hooper review maintains that private investment will be required to modernise the Royal Mail fully. We do not know how much that will be and we are unable to verify any figures, because the Government have refused to provide any such details. Can the Minister replying to this debate confirm that when he comes forward with privatisation proposals, he will provide details of the likely capital requirement, so that the House can properly assess those proposals?
	Thirdly, and perhaps most problematic of all, as pointed out by my right hon. and learned Friend the Member for Rushcliffe, the right hon. Member for Leicester, West and the Chairman of the Business and Enterprise Committee, my hon. Friend the Member for Mid-Worcestershire, current estimates of the pension deficit vary widely, but we all know that it is the largest problem that the Royal Mail faces. Worse still, the deficit is growing, in what is a turbulent economy.
	We have voiced serious concerns about the Government's intentions in that regard. By taking over the entire responsibility for the pension scheme on an unfunded basis, the Government could quite easily raid the fund's £22 billion of assets, thereby bolstering the nation's balance sheet, which has been saddled with mind-boggling levels of debt, in the short term and piling on unknown billions of liabilities for future generations. Absolutely nothing that the Government have said today gives us any confidence about what their direction will be in that regard. I join the right hon. Member for Neath (Mr. Hain) in calling for the Government to provide their proposals, and the sooner the better.
	The Minister now needs to reassure the hundreds of thousands of postal workers who are members of the scheme that a future Government will not have the ability to strip them of their benefits. One thing is for sure: with a revaluation of the pension fund due in the near future—I think in the next month or two—the Government cannot put off dealing with the issue any longer. The consequences for working members of the scheme could otherwise be very bleak, and they would certainly not thank the Government for their continued inaction.
	So a variety of issues need to be looked at together. Mr. Hooper noted that a strategic partnership with a third party, effective regulation and the need to deal with the pensions deficit were all connected, and all necessary. We agree with his view that we cannot pick and mix between these issues, and that they need to be dealt with at the same time, although that was clearly not the view of the hon. Member for Nottingham, East (Mr. Heppell).
	My right hon. and learned Friend the Member for Rushcliffe, my hon. Friends the Members for Cotswold (Mr. Clifton-Brown) and for Wealden, and the hon. Members for Blaenau Gwent (Mr. Davies) and for Ynys Môn all pointed out that the importance of maintaining the post office network and retaining the universal service obligation was assumed in all of this. Combined, they are an essential element of our society, providing a lifeline to communities up and down the country. As Hooper's review said, they are part of our economic and social glue, but their future is inextricably linked with Royal Mail.
	Let us also keep in mind that the price control regulations are due to be revisited in 2010, which could seriously impact on the process of part-privatisation and modernisation. Royal Mail's dominance of the market ensures the need for strong regulation. The Hooper proposals for a merger of Postcomm and Ofcom are generally welcomed, although as my hon. Friend the Member for Mid-Worcestershire said, we will need to be satisfied that emphasis in the merged entity will be placed on the development of specific postal industry expertise.
	Rumours abound that legislation to enable privatisation is imminent. Will the Minister now confirm when this is going to happen? We strongly urge the Government to initiate the Bill here in this elected Chamber, and not in the other place. We believe that this elected House is best qualified to deal with matters of such importance, even if most of the Department's unaccountable Ministers sit in the other place. I am sure that that sentiment is shared by many hon. Members here.
	The Royal Mail, like the Labour Government, stands on the brink. The difference, though, is clear. While redemption is beyond this Government, the Royal Mail can yet recover and prosper. There is a final opportunity for the Government to revive the Royal Mail instead of continuing to drag it down. We urge them to release and rapidly implement appropriate proposals, and to set the Royal Mail on the course to recovery set out so comprehensively in the Hooper review.

Ian Pearson: Royal Mail and the Post Office form an important part of the social fabric of UK society, along with the universal service obligation, which the Government put into primary legislation for the first time in 2000. It is right that we have had a passionate debate on the future of Royal Mail, and I pay tribute to my hon. Friends for the contributions that they have made this evening.
	My right hon. Friend the Member for Leicester, West (Ms Hewitt) made a very brave speech. She has a great deal of experience in these areas, and she talked about the fact that far more automation was necessary in the Post Office. I absolutely agree with her about that. My hon. Friends the Members for Morecambe and Lunesdale (Geraldine Smith) and for Stoke-on-Trent, North (Joan Walley) are long-standing champions of Royal Mail and the Post Office. They hold strong views on these matters, and I want to tell them that there will be more opportunities to debate the Government's policy proposals in future.
	My hon. Friends the Members for Nottingham, East (Mr. Heppell) and for Ynys Môn (Albert Owen) also raised some important points. My hon. Friend the Member for Nottingham, East stressed the fact that the Hooper recommendations were a package. We strongly believe that this is a package of policy proposals, and that it would be wrong to pick and mix. My hon. Friend the Member for Ynys Môn mentioned Glas Cymru. In response, I want to point out that that is a monopoly water utility, rather than a company facing intense competition. The kind of business model that is appropriate for a water utility might not necessarily be appropriate for Royal Mail.
	I want briefly to refer to the Government's investment in the Post Office. We provided £2 billion to support the network between 1999 and 2006, and we are providing a further £1.7 billion to 2011, including a £150 million a year subsidy. We have made it clear that we will continue to subsidise the network beyond that time, which demonstrates the Government's commitment.
	In the remaining time available, I want to talk about the economics of Royal Mail, and then to talk about the politics. The first thing on the economics is that we believe Hooper produced a thorough report. The hon. Member for Blaenau Gwent (Mr. Davies) asked whether Hooper spoke for the posties. Yes, he certainly did on visits to UK mail centres and delivery offices, and the panel went out on rounds with postal workers. Hooper and his team also made visits abroad and saw the post at work in the Netherlands, France, Denmark, Belgium, Germany and the United States of America.
	Let us look at Hooper's numbers and the challenges to the business model that Royal Mail faces today. Hooper talked about a market decline of anything between 5 and 7 per cent.—and the figures have only got worse since then. As my right hon. Friend the Member for Leicester, West said, the loss of business to digital communications is five times more than the loss to competition among other postal operators, but Royal Mail is still losing business to other such operators. The letters business made a loss last year. Royal Mail made a profit in the third quarter, but it was largely due to a European subsidiary and it came only after Government support for the business. We should contrast that with leading counterparts that are making margins of 13 to 15 per cent. on their postal business.
	It is quite clear that Royal Mail needs cash to modernise. It has a £1.2 billion commercial loan provided by the Government: half has already been spent and the other half will probably be spent in the next 12 months, but it is still not nearly enough, given the huge problems Royal Mail faces in modernising and competing in an intensely competitive environment. On top of that, as hon. Members have noted, there is an enormous pension deficit, valued at £4.9 billion in March 2008—and, as we know, most asset classes have seen a severe decline since that period, so the pension deficit can only get substantially worse. Hooper also forecasts that from 2009-10 onwards, there will be a £400 million a year cash-flow deficit. With what we know now and from what has happened since Hooper reported, the situation is, as I have said, only going to get worse.
	If we accept that doing nothing is not an option, we have to ask ourselves what is the best option for the Government to pursue. How can we maintain the universal service obligation; how do we fund the business and its pensions deficit in the future; and how do we modernise the business to put it on a sustainable footing?

Ian Pearson: No, I want to continue and answer those questions in the time available to me. Let me explain my views on those questions. We have to ask what is the right thing to do for consumers—the people and businesses that use Royal Mail—and what is right and fair for Royal Mail's work force. Do we, as taxpayers, want to address the pensions deficit? We have said, as a Government, that we do, but the Opposition have been strangely silent on that issue. Should taxpayers totally fund the likely future deficits of Royal Mail, which could rise above £500 million a year for the foreseeable future?
	Personally, I would not rule out some sort of share participation by Royal Mail work force, but I do not think it is in their long-term interest to set their face against bringing in private capital through a minority partnership. That is why the Government's policy is to support the proposals in the Hooper report. As I say, we intend to make proposals for discussion.

Ian Pearson: I have only two or three minutes before the guillotine falls.
	I want to be as brutally honest as the right hon. and learned Member for Rushcliffe. We do have problems discussing this issue in the Labour party: there is clearly a difference of opinion, and it would be wrong for us not to reflect that by debating the issue. However, I do not think that an Opposition day debate that is being used opportunistically by the Conservative party is the appropriate vehicle for such a discussion.
	We, as a Government, have always made clear our wish to maintain the universal service obligation and to do the right and fair thing by Royal Mail work force and by the United Kingdom taxpayer, who is a consumer of the service and is also being expected to fund it. Let me pose this question to my right hon. and hon. Friends: should the Government fund the whole of Royal Mail for ever—the pensions deficit, the other ongoing deficits and the requirements for modernisation—or does it make sense to bring in some private sector capital and expertise? That is a question that we must continue to debate in the future, although we are not making decisions on it tonight. The Government will present policy proposals shortly.
	I appreciate Members' concerns, but let us discuss them openly and honestly. Royal Mail's future poses a real structural problem, because of the changing business world in which it operates. Let us be frank about that, and try to find the best way in which to sort it out.

Phil Woolas: I congratulate the hon. Member for Christchurch (Mr. Chope) on securing this debate. Let me start by saying that this is a good example of how our parliamentary system works for the best, in that a constituent—or in this case a company in his constituency, European Skybus flight training—can raise a matter with the Member of Parliament, who can raise it with the Government in the House to bring the matter to Ministers' attention, as he successfully has. I hope to be able to provide a solution to the problem for him. I have always been a supporter of the idea of a single-Member constituency, whether across party lines or not. This is not a partisan issue. The hon. Gentleman is rightly trying to protect his constituent, and I am happy to try to help.
	I have, of course, looked into the background to this case. The hon. Gentleman wrote to my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform on 10 December and received a reply from the Under-Secretary of State, my hon. Friend the Member for Dudley, South (Ian Pearson), dated 9 February. I am pleased that he got a reply before this debate. The system works in wonderful ways. I do not think that it is cause and effect, but he has his reply, so that is good. The reply outlines part of the solution that he wants to take forward. To be fair—as I always am, I hope, to other Government Departments—this is a matter primarily for my Department and I take responsibility for finding the solution that he looks for.
	As a result of the information that we now have, the UK Border Agency is looking afresh at the immigration position of persons coming to the UK for training in techniques and work practices used here where solely training facilities are involved and no teaching is provided. I will be trying to give the hon. Gentleman a satisfactory answer very quickly, and I am confident that I will be able to do so. The additional information has been helpful, and officials have spoken to European Skybus flight training.
	To reassure the hon. Gentleman that we are not the bureaucratic blunderers that he has sometimes accused us of being, I have looked into the situation in his constituency, and it is a good situation. Four companies have received a licence under the new scheme, another is under consideration, and another has been refused. I am happy to share the details with him should he so choose. Let me emphasise that our approach with companies is not to act in a policing way. If people are refused, we have mechanisms in place to help them. We do not approach this in a heavy-handed way at all. We are trying to help our businesses.
	We are also, of course, trying to introduce a new immigration system. Consequences are inevitable if one makes a radical change to a system, and this is the biggest shake-up in the immigration system since Empire Windrush arrived in 1947—I genuinely think that that is the case given the introduction of e-borders and the points-based system. Some would say that we are taking too long to implement it, but it is a big change and we are taking our time to get it right. I hope that the hon. Gentleman would be charitable enough to say that when one makes a big change in public policy, there are unintended consequences. That is why it is right that the House can debate such issues, and that right hon. and hon. Members can bring matters to the attention of the Executive, or the individual Minister concerned, which the hon. Gentleman has done.
	This is the most radical reworking of the immigration rules for a generation, even if one does not accept my time scale. We have created a clear, defined and targeted points-based system that allows a fair, transparent and objective set of rules for decisions, which will improve compliance and reduce the scope for abuse. I know that the hon. Gentleman supports those goals in immigration policy. I and my colleagues have attempted to build a consensus across the House on those principles; he has supported them and I am grateful for that.
	We have increased control over migrants entering the United Kingdom, especially those from outside the European Union. We now have greater flexibility to respond to UK skills shortages. In the current economic circumstances, it is more important than ever that we can decide on the number of highly skilled and temporary workers we need and on the sectors of the economy that need them, so we have set up this new superstructure. Under the old regime, the employer had to apply to the Home Office for a work permit for each individual migrant that they wished to employ. Even if that were approved, the migrant would have to apply separately for entry clearance, which might be refused, leaving the employer to start all over again. Under the new points-based system, an employer issues a certificate of sponsorship to a migrant worker who then applies for entry clearance overseas. If that is granted, the migrant can travel to the UK and begin work straight away.
	We are particularly keen to reduce the burdens of the system on small businesses, which is why the example that the hon. Gentleman highlighted is quite important when ensuring that we get the system right. With that keenness to reduce burdens in mind, we issue a small charge to small businesses, as well as to charities, of £300 for sponsorship, as opposed to the £1,000 charge for larger companies. There is evidence of a strong take-up of that system. By the beginning of this month, almost half the applications decided were submitted by small businesses. I would have expected a greater proportion of large businesses, but that has proven not to be the case.
	Where necessary, employers will need to undertake resident labour market tests to ensure that no British or EU national could be found for advertised posts before an offer of employment is made to an overseas national. We are asking businesses to take an active role in ensuring compliance—we are now coming to the detail that relates to the problem encountered by the hon. Gentleman's constituents. We require UK organisations of any size to apply for a licence in order to bring migrants to the UK to work or study and if granted, sponsors are given a rating of A or B. The A rating is given when they comply, and a B is given when they need a little help in order to do so. That backs up my point about the system not being heavy-handed. So far, we have issued just under 10,000 licences. We are meeting our commitment to processing complete applications within six weeks and we intend to reduce that time to four weeks by April this year.
	I mentioned that six licence applications have been received from the hon. Gentleman's constituency, and I am happy to repeat that four companies from Christchurch sit on the sponsored register as A-rated—in other words, no problems. A further application is under consideration and one has been refused. The particular case that he highlighted falls into a category that, frankly, was not fully understood when the rules were drawn up.
	We are trying to prevent abuse and prevent the system from being subject to clandestine illegal immigration. There is no suggestion whatever that that is happening the case of European Skybus flight training. As I understand it—the hon. Gentleman will correct me if I am wrong—it comes down to the fact that the people involved are primarily coming for the purpose of training that is related to the service that the company offers. As a result of the information that he and the company have provided, we are looking afresh at the immigration position of persons coming to the UK for training in techniques and work practices used here, where only training facilities are provided and no teaching. It is a matter of definition.
	It is incumbent on me to say to the hon. Gentleman that we will make a decision very shortly. He asked for more than a decision—a solution—and I am confident that I will be able to give him one. I understand his point, and I hope to provide such a solution to him and to others in a similar situation. He has highlighted a problem that has arisen, but he will know from his experience as a Minister that sometimes, in providing a solution to a specific problem, one creates a general problem for others. I do not want to be back here in three months' time responding to further Adjournment debates as a result of another unintended consequence. That is why I do not want to take a snap decision; I want to find him a solution, but I do not want to do so immediately, just in case there is a consequence that I have not foreseen.